The Keystone XL Pipeline Might Not be Totally Dead
Disclaimer: This post does not constitute financial advice. Author has no position in TC Energy. Do your own due diligence before making an investment.
Over the weekend it was announced that Joe Biden would be killing the Keystone XL pipeline. But this wasn’t an official announcement. It came from a note circulated by the transition team. It was talking about Biden’s Day 1 actions.
“Rescind Keystone XL pipeline permit” is supposedly one of Biden’s early executive actions. Although at this point, it’s just a trial balloon. (A statement released to gauge the public’s reaction.)
Alberta has sunk 1.5 billion into building the pipeline. If it doesn’t go through, then Alberta is in a tough spot.
This will be a challenge for Joe Biden and Justin Trudeau.
Trudeau spent the last four years dodging any harsh criticism of Trump. Which was probably smart, given that America is Canada’s largest trading partner. Our economies depend on each other. 75.4% of Canadian exports in 2019 went to the US.
Joe Biden has committed to rejoining the Paris climate accords. Axing the pipeline would be in accordance with that.
But allowing the pipeline to be built would help rebuild America’s relationship with Canada, which was damaged when Trump applied 10% aluminum tariffs in name of “national security.” Trump also said that Canada was taking advantage of the US without providing any evidence of this.
A lot of Canadians were upset about that.
…and still are.
The Premier of Alberta, Jason Kenney believes that Canada has "solid legal basis" to challenge the termination of the pipeline under Canada’s trade agreement with the US. That being said, it appears TC Energy Corp would prefer a softer touch. TC Energy said they would spend $1.7B on renewable energy sources to operate the pipeline. They also pledged to only hire union workers. They estimate that all greenhouse gas emissions generated through the operation of the pipeline could be eliminated by 2030.
There’s definitely a deal to be made here.
Canada needs to pipeline to save the Albertan oil industry. Joe Biden wants to kill it so he can fulfil his campaign promise to fight climate change. Somewhere in the middle is a happy medium.
If enough safeguards to the environment were put in place, then there’s no reason not to finish the pipeline.
TC Energy is currently down 4.33%. If the pipeline doesn’t get the axe, then it’s reasonable to assume that the price would rebound quick. TC Energy might make a great short-term investment, or a fantastic long-term one if you believe in the Albertan oil industry.
If you look at the one-year chart, things might seem pretty grim.
@YahooFinance
But if you scroll out to a longer chart…
@YahooFinance
…you see that TC Energy has had these setbacks before.
We’ll see what happens.
