The article discusses the potential consequences of a trade war between the United States and Canada, specifically in the energy sector. The U.S. has proposed tariffs on Canadian products, which could lead to a significant impact on Canada’s energy industry.
Key points from the article:
- Canada is more reliant on the US than vice versa when it comes to energy exports.
- A tariff on Canadian oil would likely drive discounts on Western Canadian Select (WCS), the country’s benchmark heavy crude blend, which could lead to reduced demand for Canadian oil in the US.
- The Trans Mountain pipeline expansion has opened new trade routes to Asia, but the majority of tankers carrying Canadian barrels away from the B.C. coast are still winding up in California.
- Canada needs more customers for its energy products to avoid being beholden to the US.
Some key statistics mentioned in the article:
- Over 97% of Canadian crude oil exports were destined for the US in 2023, according to the Canada Energy Regulator.
- Western Canadian Select (WCS) typically trades at a discount of $10 to $20 per barrel compared to U.S. benchmark West Texas Intermediate.
These statistics highlight the significant impact that tariffs could have on Canada’s energy industry and its reliance on the US market.
The article also mentions three major Canadian oil and gas companies that recently announced their intention to boost production in 2025:
- Suncor Energy Inc. plans to increase output by five per cent next year.
- Cenovus projected a four per cent increase in production for 2025.
- Imperial Oil Ltd. forecasted growth of three per cent in 2025.
These developments could be impacted if Canadian energy becomes a bargaining chip in a larger trade war.
The article concludes by emphasizing the need for Canada to diversify its energy markets and reduce its reliance on the US market. This can be achieved by developing new pipelines and increasing exports to other regions, such as Asia.