Keystone decision bad news for Canada-U.S. relations

A group of demonstrators rally against the controversial Keystone XL oil pipeline outside President Barack Obama's …Call it sour grapes if you will, but many American supporters of the Keystone XL pipeline are proclaiming that the rejection of the controversial project is bad news for Canada-U.S. relations.

On Wednesday, U.S. President Barack Obama issued a statement which said that TransCanada's application for the 2,740-km pipeline was denied because the State Department did not have enough time to complete the review process.

At a press conference following the announcement, Republican leadership hopeful Newt Gingrich said Obama was pushing Canada into the "hands of China."

"If I would have said to you three or four years ago that it was inconceivable that an American president would drive Canada into a partnership with China. But that's what's going to happen," Gingrich said.

"Prime Minister Harper is a Conservative. He's pro-American. It's much less expensive and makes much more sense to bring the pipeline straight down so you don't cross any mountains. But he's faced with a president who is not going to allow Canada to get its oil out to the United States, he's going to cut a deal with the Chinese for them to finance a pipeline across the Canadian Rockies to  Vancouver and they're going to ship it straight to China.

"What Obama will have done is killed jobs, weakened American energy security, and driven Canada into the hands of China out of just sheer utter stupidity."

David Pumphrey of the Center for Strategic and International Studies in Washington told Businessweek.com that the administration's decision may hurt relations between the two countries.

"It certainly introduces new uncertainties into the economic relationship," he said.

"This is a cornerstone of economic development for the country."

And, Jack Gerard, the CEO of the American Petroleum Institute, said the move is proof that the United States is not interested in furthering its commercial relationship with Canada.

"The prime minister of Canada is losing confidence in the decision-making process on the part of the president of the United States," he said in a press conference according to iPolitics.

"As of yesterday, the prime minister in a public statement, said that he's discouraged by the United States holding Canada hostage."