When President-elect Donald Trump threatened to impose 25 per cent tariffs on imports from Canada most Canadian observers believed oil and natural gas would be exempt.
Canada supplies a major part of the oil and natural gas consumed by the United States.
In 2022 crude oil imports from Canada amounted to 60 per cent of U.S. consumption and allowed exports of oil by the United States.
About 20 per cent of U.S. consumption of natural gas is imported from Canada. That allows the United States to export huge volumes of natural gas into the more lucrative export market, especially with compressed LNG getting three times the price of gas in America.
In short, Canada's exports of oil and gas provide consumers with low-cost energy and allow thriving U.S. exports.
The United States buys our oil at a discount of $10 to $15 a barrel simply because we have had no other market. Eighty per cent of our oil goes south.
Right now that's sold at about a 15 per cent discount, costing oil producers and government billions annually.
The Trans-Mountain Pipeline so far hasn't made much of a dent in the oil discount but gives Canada a market other than the United States.
One wonders why Trump wouldn't exempt oil and natural gas from tariffs.
The U.S produces 13 million barrels of oil a day but consumes 21.8 million. Canada supplies four million barrels of that deficit with the rest from the Middle East and Mexico.
Tariffs on Canadian oil and gas are about his pursuit of vengeance on those he thinks have done him wrong.
Much of the Canadian oil exports are sold to the Koch Oil refineries which are specially built to process heavy oil.
Trump seems to not like the Koch Oil billionaires.
In 2016 and 2020 the Koch billionaires were heavy financial supporters of Trump election races.
By 2024 they decided not to fund Trump at all, instead putting funds in support of what they believed were key senate and congressional races. Trump seemed to be outraged.
The only alternative supply for Koch refineries is Venezuelan oil, currently embargoed, and Iran, also sanctioned.
He doesn't seem to care who is hurt by his actions.
With 99 per cent of our natural gas exports and 80 per cent of crude oil exports to the United States, tariffs would cripple our oil and gas industry.
Drilling for oil would stop and production would be turned off. Thousands of jobs would be lost.
Americans would find energy more expensive.
Tariffs on Canadian oil and natural gas threaten many of the 130,000 Albertans working in the industry or supporting operations In Saskatchewan that includes 30,000 jobs.
The oil and gas industry is a driver of the economy and particularly of exports.
Such tariffs make no sense at all. Then much of Trump's ideas are muddled and make no sense.
Trump may do much worse to the Canadian oil and gas industry than Trudeau's emission caps.
Ron Walter can be reached at [email protected]
