U.S. Politics Means China Success for TransCanada and Keystone Pipeline
Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Who wins every time the environmentalists delay the TransCanada (NYSE: TRP) Keystone XL Pipeline?
China.
Canada has so much oil they want to sell it off. The United States is very dependent on oil. And yet, somehow the U.S. just can't seem to get its act together enough to buy it from its closest neighbors (or drill its own oil).
On the other hand, China is willing to go all the way across the Pacific Ocean to get the oil that the U.S. could have had first. This makes little to no sense on any financial or national security level.
What is China going to do with all of that Canadian oil? Sell it. And Senator Charles Schumer (D-NY), the Senate’s number three Democrat, thinks that the Chinese should be forced to provide fair access for U.S. companies to its domestic markets.
Because that makes perfectly good sense- don't buy it yourself, and then let one of your biggest competitors on all world markets and threats to national security buy it and sell it back to you! Senator Schumer, please check your Harvard degrees, and retake simple business math.
The state-run Chinese National Offshore Oil Corporation (CNOOC) (NYSE: CEO) has offered $15.1 billion for Canadian firm Nexen (NYSE: NXY) and its highly coveted stakes in the Alberta tar sands. The deal would give China access to North American energy expertise and resources. And it gives Canada much-needed capital to better develop the tar sands.
But Nexen has American holdings, which means the Committee on Foreign Investments in the United States (CFIUS) is allowed to meddle in the deal. Senator Schumer is expected to interfere with the deal unless the U.S. gets some access to the Chinese holdings.
Canada will most likely fast-track the approval process of the CNOOC and Nexen deal.
"We're going to take a good look at it," Hon. Rob Merrifield, a member of the Canadian Parliament, said recently during a speech at the U.S. Chamber of Commerce. But the lawmaker made it clear that Chinese investment is welcome in Canada. "We're going to want more trade with China."
I repeat, who wins when the U.S. drags its feet on the Keystone XL Pipeline? China.
And why shouldn't Canada do business with China? For the Canadians, building the pipeline and the deal with China means more jobs and tax revenue.
And let's not forget, Nexen has a card to play in all of this as well. If Mr. Schumer and the Obama Administration try to muck things up, Nexen can just sell off its U.S. interests.
Giving the U.S. no hand to play, and leaving it at the mercy of China.
Who wins when the U.S. drags its feet on the TransCanada Keystone XL Pipeline?
China.
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