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Canadian Energy Centre

Experts urge caution with Canadian energy in response to Trump tariffs

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7 minute read

From The Canadian Energy Centre

By Will Gibson

‘We want Americans to stand up for our supply’

A lawyer by training, Gary Mar is also a keen student of history. And he recommends Canadians look at what happened when past U.S. administrations imposed tariffs on imports before jumping to add costs to Canadian energy.

“President Richard Nixon imposed a 10 per cent tariff in 1971 and withdrew it after a few months because it caused so much pain for American consumers,” says Mar, CEO of the Canada West Foundation, who served as Alberta’s trade representative in Washington from 2007 to 2011.

“Canadians and their governments need to be patient. Any tariffs on energy will be passed on to consumers in the United States. We shouldn’t let the president off the hook for raising the price to American drivers by putting more duties on energy we export,” he says.

“We want Americans to stand up for our supply, not displace the anger with President Trump for raising prices with anger towards Canadians.”

A major U.S. supplier

The U.S. imports more than four million barrels of oil per day from Canada, or about one out of every five barrels the country consumes. Most Canadian imports are destined for refineries in the U.S. Midwest including Illinois, Indiana, Michigan and Ohio.

About 99 per cent of natural gas imports into the United States also come from Canada. Natural gas imports flow primarily to Idaho, North Dakota, Minnesota and Montana, according to the U.S. Energy Information Administration.

Trump tariffs

Nixon put tariffs in place in an attempt to weaken the U.S. dollar against foreign currencies and strengthen U.S. exports.

Mar, who served as cabinet minister in the Klein and Stelmach governments from 1993 to 2007, sees Trump’s tariffs as aimed to repatriate manufacturing and jobs to America.

“President Trump made this explicitly clear…if you want to sell manufactured goods in the United States, you need to move your factories here,” says Mar.

“But Canadian oil and natural gas are key inputs that help U.S. manufacturing. We ship the products or partially refined products that support manufacturing of finished products in the United States. Tariffs will raise those costs for U.S. manufacturers and ultimately American consumers.”

A divisive rerun of the National Energy Program?

Mar’s former cabinet colleague Ted Morton agrees Canada needs to exercise patience and caution in any response to U.S. tariffs.

Morton, who served as an Alberta cabinet minister from 2006 to 2012, strongly disagrees with the idea of placing countervailing tariffs on energy exports to the United States. Morton casts it as a divisive rerun of then Prime Minister Pierre Trudeau’s controversial National Energy Program in the early 1980s.

Energy export tariffs “would be an attempt to revive Liberal Party support from disillusioned voters in Ontario and Quebec,” he says.

“The biggest loser in Trump’s new tariff war will be Ontario due to the integration of the auto sector between the U.S. and Canada. It’s simple political arithmetic. Ottawa could collect $4 or $5 billion by taxing energy exports in western Canada and send that money to prop up struggling industries in Ontario and Quebec,” Morton says.

“Ontario and Quebec combined have a total of 199 MPs, more than enough to form a majority government. It’s the ‘screw the West and take the rest’ strategy. It’s how the Liberals won the 1980 federal election, and they could try it again.”

Legal and constitutional precedents

And while imposing export tariffs on Canadian energy could be politically popular in central Canada, Morton suggests the action would not withstand a legal challenge thanks to legal and constitutional precedents set by former Alberta Premier Peter Lougheed.

“Peter Lougheed left future Alberta premiers with some very effective legal weapons. His government successfully challenged the constitutionality of Trudeau’s export tax on natural gas. He then teamed up with the other western premiers to negotiate a new constitutional amendment that affirms provincial jurisdiction over the development and conservation of natural resources,” Morton says.

“Premier Danielle Smith should win any constitutional challenge if the federal government tries to impose an export tariff on oil or natural gas.”

Morton, like Mar, also counselled patience in responding to tariffs because “Trump’s tariffs on Canadian energy will punish American consumers more than Canadians.”

The national interest

David Yager, who has studied and analyzed energy policy for more than 40 years, agrees tariffs on energy have the potential to drive a wedge between Alberta and the rest of the country in the same way the National Energy Program did.

“The dynamic definition of national interest is what I struggle with. Going back several decades, it was in the national interest to get oil and gas across Canada so there was a drive to build pipelines east and west,” says Yager, a consultant who also serves as a special advisor to Premier Smith.

“Today, the national interest has flipped again, and energy exports are now a source of revenue to save the ‘real’ Canada, which is central Canada. It’s the same kind of logic that has seen the emissions cap on oil and gas as well as the carbon tax.”

If Canada wants to retaliate, Yager recommends putting a duty on the 1.7 billion cubic feet of natural gas imported by Ontario and Quebec from the northeastern United States.

“That would be the appropriate tit for tat response,” Yager says.

“You could build a nice pool of capital and clobber U.S. producers without driving a wedge between Alberta and the rest of the country.”

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Alberta

The case for expanding Canada’s energy exports

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From the Canadian Energy Centre

By Deborah Jaremko

For Canada, the path to a stronger economy — and stronger global influence — runs through energy.

That’s the view of David Detomasi, a professor at the Smith School of Business at Queen’s University.

Detomasi, author of Profits and Power: Navigating the Politics and Geopolitics of Oil, argues that there is a moral case for developing Canada’s energy, both for Canadians and the world.

David Detomasi. Photo courtesy Smith School of Business, Queen’s University

CEC: What does being an energy superpower mean to you?

DD: It means Canada is strong enough to affect the system as a whole by its choices.

There is something really valuable about Canada’s — and Alberta’s — way of producing carbon energy that goes beyond just the monetary rewards.

CEC: You talk about the moral case for developing Canada’s energy. What do you mean? 

DD: I think the default assumption in public rhetoric is that the environmental movement is the only voice speaking for the moral betterment of the world. That needs to be challenged.

That public rhetoric is that the act of cultivating a powerful, effective economic engine is somehow wrong or bad, and that efforts to create wealth are somehow morally tainted.

I think that’s dead wrong. Economic growth is morally good, and we should foster it.

Economic growth generates money, and you can’t do anything you want to do in social expenditures without that engine.

Economic growth is critical to doing all the other things we want to do as Canadians, like having a publicly funded health care system or providing transfer payments to less well-off provinces.

Over the last 10 years, many people in Canada came to equate moral leadership with getting off of oil and gas as quickly as possible. I think that is a mistake, and far too narrow.

Instead, I think moral leadership means you play that game, you play it well, and you do it in our interest, in the Canadian way.

We need a solid base of economic prosperity in this country first, and then we can help others.

CEC: Why is it important to expand Canada’s energy trade?

DD: Canada is, and has always been, a trading nation, because we’ve got a lot of geography and not that many people.

If we don’t trade what we have with the outside world, we aren’t going to be able to develop economically, because we don’t have the internal size and capacity.

Historically, most of that trade has been with the United States. Geography and history mean it will always be our primary trade partner.

But the United States clearly can be an unreliable partner. Free and open trade matters more to Canada than it does to the U.S. Indeed, a big chunk of the American people is skeptical of participating in a global trading system.

As the United States perhaps withdraws from the international trading and investment system, there’s room for Canada to reinforce it in places where we can use our resource advantages to build new, stronger relationships.

One of these is Europe, which still imports a lot of gas. We can also build positive relationships with the enormous emerging markets of China and India, both of whom want and will need enormous supplies of energy for many decades.

I would like to be able to offer partners the alternative option of buying Canadian energy so that they are less reliant on, say, Iranian or Russian energy.

Canada can also maybe eventually help the two billion people in the world currently without energy access.

CEC: What benefits could Canadians gain by becoming an energy superpower? 

DD: The first and primary responsibility of our federal government is to look after Canada. At the end of the day, the goal is to improve Canada’s welfare and enhance its sovereignty.

More carbon energy development helps Canada. We have massive debt, an investment crisis and productivity problems that we’ve been talking about forever. Economic and job growth are weak.

Solving these will require profitable and productive industries. We don’t have so many economic strengths in this country that we can voluntarily ignore or constrain one of our biggest industries.

The economic benefits pay for things that make you stronger as a country.

They make you more resilient on the social welfare front and make increasing defence expenditures, which we sorely need, more affordable. It allows us to manage the debt that we’re running up, and supports deals for Canada’s Indigenous peoples.

CEC: Are there specific projects that you advocate for to make Canada an energy superpower?

DD: Canada’s energy needs egress, and getting it out to places other than the United States. That means more transport and port facilities to Canada’s coasts.

We also need domestic energy transport networks. People don’t know this, but a big chunk of Ontario’s oil supply runs through Michigan, posing a latent security risk to Ontario’s energy security.

We need to change the perception that pipelines are evil. There’s a spiderweb of them across the globe, and more are being built.

Building pipelines here, with Canadian technology and know-how, builds our competitiveness and enhances our sovereignty.

Economic growth enhances sovereignty and provides the resources to do other things. We should applaud and encourage it, and the carbon energy sector can lead the way.

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Business

Oil tanker traffic surges but spills stay at zero after Trans Mountain Expansion

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From the Canadian Energy Centre

Bigger project maintains decades-long marine safety record

The Trans Mountain system continues its decades-long record of zero marine spills, even as oil tanker traffic has surged more than 800 per cent since the pipeline’s expansion in May 2024.

The number of tankers calling at Trans Mountain’s Westridge Marine Terminal in the Port of Vancouver in one month now rivals the number that used to go through in one year.

A global trend toward safer tanker operations

Trans Mountain’s safe operations are part of a worldwide trend. Global oil tanker traffic is up, yet spills are down, according to the International Tanker Owners Pollution Federation, a London, UK-based nonprofit that provides data and response support.

Graph courtesy International Tanker Owners Pollution Federation

Transport Canada reports a 95 per cent drop in ship-source oil spills and spill volumes since the 1970s, driven by stronger ship design, improved response and better regulations.

“Tankers are now designed much more safely. They are double-hulled and compartmentalized to mitigate spills,” said Mike Lowry, spokesperson for the Western Canada Marine Response Corporation (WCMRC).

WCMRC: Ready to protect the West Coast

One of WCMRC’s new response vessels arrives in Barkley Sound. Photo courtesy Western Canada Marine Response Corporation

From eight marine bases including Vancouver and Prince Rupert, WCMRC stands at the ready to protect all 27,000 kilometres of Canada’s western coastline.

Lowry sees the corporation as similar to firefighters — training to respond to an event they hope they never have to see.

In September, it conducted a large-scale training exercise for a worst-case spill scenario. This included the KJ Gardner — Canada’s largest spill response vessel and a part of WCMRC’s fleet since 2024.

“It’s part of the work we do to make sure everybody is trained and prepared to use our assets just in case,” Lowry said.

Expanding capacity for Trans Mountain

The K.J. Gardner is the largest-ever spill response vessel in Canada. Photo courtesy Western Canada Marine Response Corporation

WCMRC’s fleet and capabilities were doubled with a $170-million expansion to support the Trans Mountain project.

Between 2012 and 2024, the company grew from 13 people and $12 million in assets to more than 200 people and $213 million in assets.

“About 80 per cent of our employees are mariners who work as deckhands, captains and marine engineers on our vessels,” Lowry said.

“Most of the incidents we respond to are small marine diesel spills — the last one was a fuel leak from a forest logging vessel near Nanaimo — so we have deployed our fleet in other ways.”

Tanker safety starts with strong rules and local expertise

Tanker loading at the Westridge Marine Terminal in the Port of Vancouver. Photo courtesy Trans Mountain Corporation

Speaking on the ARC Energy Ideas podcast, Trans Mountain CEO Mark Maki said tanker safety starts with strong regulations, including the use of local pilots to guide vessels into the harbour.

“On the Mississippi River, you have Mississippi River pilots because they know how the river behaves. Same thing would apply here in Vancouver Harbour. Tides are strong, so people who are familiar with the harbor and have years and decades of experience are making sure the ships go in and out safely,” Maki said.

“A high standard is applied to any ship that calls, and our facility has to meet very strict requirements. And we have rejected ships, just said, ‘Nope, that one doesn’t fit the bill.’ A ship calling on our facilities is very, very carefully looked at.”

Working with communities to protect sensitive areas

Beyond escorting ships and preparing for spills, WCMRC partners with coastal communities to map sensitive areas that need rapid protection including salmon streams, clam beds and culturally important sites like burial grounds.

“We want to empower communities and nations to be more prepared and involved,” Lowry said.

“They can help us identify and protect the areas that they value or view as sensitive by working with our mapping people to identify those areas in advance. If we know where those are ahead of time, we can develop a protection strategy for them.”

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