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Keystone decision a setback for U.S.-Canada relations

The Globe and Mail
Friday, Nov. 11, 2011

The Obama administration’s move to sideline the Keystone XL pipeline is a major setback for relations between the world’s two largest trading partners, and threatens Canada’s role as the leading energy supplier to the United States.

The U.S. State Department’s decision to force TransCanada Corp. to explore alternative pipeline routes in Nebraska pushes out a final ruling until at least 2013, well after next year’s U.S. presidential and congressional elections.

he delay puts at risk a vital piece of the historic economic relationship that binds the world’s largest oil market and its largest supplier.

The State Department decision sent a shock wave through Canada’s energy industry, an economic stalwart of the country that has for almost six decades counted on the United States as virtually its sole export market. The first dribs of oil began to find their way across the border in 1952, when Canada sent an average 3,900 barrels a day south. That volume has grown nearly 500-fold. In 2009, Canada exported a total of 687 million barrels to the United States, which has previously pointed to Canada as a secure source of friendly oil.

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