With all the talk about "dependence on foreign oil" and "energy security", people often forget that North America still produces about 18% if the world's supply of oil - with the US alone accounting for 10%. The issue is that the US consumed 24% of global production, so it must meet that extra demand from foreign sources.  Fortunately, both Mexico and Canada produce about 1 million barrels a day more than they consume, and it's perfectly logical that they would export almost all of this to the US, and also that the US would prefer shipments from these "trusted neighbors" over other sources of supply and use its influence to encourage a more exclusive business relationship.

China's scramble for future oil supplies - like the recently announced deal with Turkemenistan - included a strategy to encourage increased production from Alberta's Tar Sands and pipeline the heavy crude to British Columbia for tanker shipment to China.  Various snags along the way have dampened China's enthusiasm for this portion of their overall strategy, but the most obvious one is that China needs Canada supply more that Canada needs Chinese demand because the US is right next door.  Competition for petroleum supplies would be one of the major sources of potential conflict worldwide were it not for the fact that oil is a fungible, globally exchanged, globally-priced, and easily transported commodity. Despite some strong language, in the end, the markets adjust and reach a new equilibrium very quickly.  In the end, oil, like a good journalist or lawyer, follows the money.

From Canada.com Financial Post:

CALGARY — China has abandoned its Canadian energy strategy out of frustration with federal policy and with the country's oilsands producers, turning its attention instead to "friendly Venezuela" as a way to feed new Chinese refineries.

Note: The ChinaCoalWatcher believes that issues of Venezuelan oil exports will become immensely important in the coming years and should be watched very closely.  Unfortunately, the present political situation and economic indicators are too unstable to make any solid predictions, except that, given the first opportunity, China would begin immediately begin pumping as much of the Orinoco Belt as possible.

A senior executive with state-owned China National Petroleum Corp. (CNPC), Asia's largest company, said CNPC has scrapped its involvement in a $4-billion Gateway pipeline project with Enbridge Inc. that was to move oilsands crude from Alberta to the British Columbia coast by about 2014.

... Canada's loss — its chance to develop new oil markets outside of the United States — is Venezuela's gain, Mr. Song said yesterday.

Why Canada needs "new oil markets outside the US" is a good question!

"Fortunately, Venezuelan President [Hugo] Chavez is so warm-hearted — there's a difference in attitude," he said of the political strongman in Venezuela, a country from which oil companies are now fleeing.

... Canadian producers have so far done deals in the United States and last year Enbridge deferred building the project so it could focus on ways to move growing output from the oilsands south.