They send their product to China instead.
Last November, Canadian Prime Minster Stephen Harper called approval of the Keystone pipeline a "no brainer." Much to his chagrin, President Obama chose to deny the application for Keystone, a $7 billion project that would transport Canadian crude oil between Alberta, Canada and Port Arthur, Texas via a 1,700-mile pipeline. Canada is not only our largest trading partner; it has the third largest proven reserves of oil in the world, only surpassed by Saudi Arabia and Venezuela.
But PM Harper has made it clear that Canada isn't going to sit around waiting for American politicians to get their act together. Recently in a speech to Chinese businessmen Harper noted: "Currently, 99% of Canada's energy exports go to one country -- the United States. And it is increasingly clear that Canada's commercial interests are best served through diversification of our energy markets." In other words, Canada better find more stable trading channels.
Harper's speech is part of a four-day tour of China where he hopes show Canada's commitment as a potential trade partner. Canada doesn't have a viable way to transport oil sands crude to Asia, but with the current state of Keystone in the U.S., that option may prove to be more economically viable. Plans have been crafted to carry the crude from Alberta across the Canadian Rocky Mountains and to the coast.
Meanwhile, lawmakers in Congress continue to squabble over how to deal with Keystone -- some want to kill the project entirely, some want to take the permiting power away from the President, some want to put up protectionist measures that ban exporting of oil from Keystone crude, some want to tax the hell out of any revenues that come from the project.
Back in China, PM Harper noted Canada would "uphold our responsibility to put the interests of Canadians ahead of foreign money and influence that seek to obstruct development in Canada in favor of energy imported from other, less stable parts of the world."