First Brexit… then Trump… Now, it’s time for Pro

Is your portfolio really prepared for what’s coming next?

To help investors like you navigate this historically uncertain — yet high-flying — market and prepare for an inevitable downturn, we’re re-opening our Motley Fool Pro Canada service to a select few new members for a short time.

To discover how Pro Canada could help you to increase your upside potential… reduce your downside risk… and earn paycheque-like income in the process, simply click here — before the small number of spots we have left are all gone!

TransCanada Corporation: 3 Things to Know About the Keystone Rejection

On Friday, U.S. president Barack Obama formally rejected the Keystone XL pipeline proposal from TransCanada Corporation (TSX:TRP)(NYSE:TRP). TransCanada had filed its initial application all the way back in 2008, before Obama had even become president.

The rejection was also a foregone conclusion. The president has downplayed the pipeline’s benefits, while emphasizing its risks, for over a year. Meanwhile, with American oil production taking off in recent years, the country doesn’t need Canadian oil like it once did. Yet it is still a big blow to Canada’s energy sector.

We will take a look at three things to know about Obama’s Keystone rejection.

1. It hurts the oil producers more than TransCanada

Even after this decision, TransCanada won’t miss a beat. The company still has over $35 billion worth of commercially secured projects, which should keep it busy for the rest of the decade. Better yet, the U.S. shale oil industry is still over reliant on rail to move its crude to market, providing a perfect opportunity for TransCanada to secure more projects.

The pain will be felt more by Canada’s energy producers. Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Canadian Natural Resources Limited (TSX:CNQ)(NYSE:CNQ) had already booked capacity on Keystone. Smaller producers in Alberta (especially those with lots of debt), who are depending more on higher oil prices, will be affected even more.

2. It is good news for most of Canada

For over a decade, rising oil prices were a boon to Alberta’s economy. But for the rest of Canada, particularly in provinces like Ontario, high oil prices were more of a curse than a blessing.

The main problem was that high oil prices led to a stronger Canadian dollar, which hurt other exporters, particularly manufacturers in Ontario. High gasoline prices were a drag as well. But with Keystone being rejected, there is a lower ceiling for oil exports to the U.S.A. This is a negative for the loonie and a positive for provinces like Ontario.

This is not a trivial matter. For example, companies like Toronto-Dominion Bank are in a very good position, while companies like Canadian Western Bank will continue to face headwinds.

3. It’s not over

TransCanada has a number of options at its disposal.

Of course, the company can give up. Or, more likely, it can wait out the results of the presidential election next year, knowing that Keystone could get approval with a Republican in the White House.

A third option– and certainly the most extreme–would be suing the U.S. government for violating NAFTA. The company has already spent $2.4 billion on the project, and could argue that it has been unfairly targeted by the U.S. government. But the U.S. has never lost a NAFTA case, so TransCanada probably won’t try this option, at least not while Obama remains in office.

In any case, we’ll probably hear more about Keystone, just not for another year.

The #1 dividend stock for the rest of 2015?

Our analysts have identified one top dividend-growth stock for the rest of 2015. Today, you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here to receive your Special FREE Report, "1 Top Stock for 2015--and Beyond."

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.