International Mega-Pipe in Doubt
Controversy continues to pour down on the proposed Keystone oil pipeline between Canada and Texas, following Washington's decision to delay approval on the $7 billion project until after next year's election.
According to USA Today the State Department announced on Thursday that it is looking into a new route for the pipeline following numerous demonstrations and protests.
Canada is understandably disappointed, with TransCanada (NYSE: TRP) the hardest hit. "We are disappointed with today's decision to delay a decision on the Keystone XL pipeline ... We remain hopeful the project will be decided on its merits and eventually approved," Harper spokesman Andrew MacDougall said.
The President has been under increasing pressure over the pipeline, with Republicans AND environmentalists on his back (and you thought YOU were having a bad day).
"Because this permit decision could affect the health and safety of the American people as well as the environment and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood," Obama said in a statement.
Environmentalists are far from convinced that the pipeline will not dirty up the coast, and they do have a point. However, TransCanada CEO Russ Girling has concerns of his own.
"Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end," Girling said. "If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need."
It looks as though this pipe will be shelved for a year or so.
Traders who believe that TransCanada will push ahead might want to consider the following trades:
- Oil is king in the States, and money nearly always talks.
Traders who believe that the pipe will be put away for now may consider alternate positions:
- Nobody likes ruffling feathers during an election year. Expect the whole thing to go quiet, unless you are talking to TransCanada.
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