Some policy decisions require the passing of time to understand their full impact.  For others, the impact is known – and felt – almost immediately.  President Obama’s decision on November 10, 2011, to delay the Keystone XL pipeline falls into the latter category.  It is the day that the president chose political expediency over economic and energy security.  Because of his action, America no longer has an exclusive oil relationship with Canada.  We also must now compete for those resources with China and other global consumers.  Let me explain.

As forecasted by numerous energy analysts, a cancellation or delay of the Keystone project intended to bring Canadian Oil Sands crude to the United States was not going to halt oil production as pipeline opponents had hoped.  The oil was going to find a market; the question was simply, where?  Unfortunately, we already know the answer and it’s not the United States.  Rather, it will now be in China and other parts of Asia.

Despite warnings by Canadian Prime Minister Stephen Harper of the real possibility of an Asian diversion of the crude, the President chose to make a non-decision decision.  The result has been swift.  US competitors have swooped in to take advantage of our indecision and regulatory dysfunction and gain valuable market share.

First in line: China.  For years, China has been purchasing partial stakes in individual oil and gas fields.  Whereas the purchase of a minority share in the United States is typical, in Canada, the norm has been the purchase of a majority stake.  But the bungled Keystone decision changed things.  Just this month, PetroChina announced it had increased its 60 percent share in the Athobasca Oil Sands Corporation to complete ownership.  According to the Wall Street Journal, this decision marks the first time a Chinese company will have full ownership over such a project.  One significant consequence will be the lack of corporate governance issues involved in the final disposition of the fields production.

PetroChina’s business decision — coupled with the Canadian government’s announcement to move forward with the 730 mile Gateway project and ship 520,000 barrels per day from the Alberta oil fields to a British Columbia Port — underscore the immediate impact of our regulatory delay.  When asked to respond, Prime Minister Harper recently told a radio station, “I think it is essential, based on what’s occurred with Keystone XL, that this country does diversify its export markets.”

So, in opting to delay a decision and appease those who oppose the Keystone XL pipeline, the President has managed to sour a relationship with a key ally by executing a regulatory “bait and switch” and to weaken our nation’s economic and energy security.   As well, he did nothing to advance his supporters’ environmental agenda, as it appears the oil will continue to be produced and exported to an economic competitor via an environmentally riskier tanker method.

Yes, November 10, 2011, will definitely go down in history.  Sadly, it will be remembered for a decision that served to weaken our competitive position globally.  Not at all where we hoped and believed we would be.