Canadian Energy Centre
Experts urge caution with Canadian energy in response to Trump tariffs
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.”
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.”
Prince Rupert Port Authority CEO Shaun Stevenson. Photo courtesy Prince Rupert Port Authority
From the Canadian Energy Centre
A strategic gateway to the world
Tucked into the north coast of B.C. is the deepest natural harbour in North America and the port with the shortest travel times to Asia.
With growing capacity for exports including agricultural products, lumber, plastic pellets, propane and butane, it’s no wonder the Port of Prince Rupert often comes up as a potential new global gateway for oil from Alberta, said CEO Shaun Stevenson.
Thanks to its location and natural advantages, the port can efficiently move a wide range of commodities, he said.
That could include oil, if not for the federal tanker ban in northern B.C.’s coastal waters.
The Port of Prince Rupert on the north coast of British Columbia. Photo courtesy Prince Rupert Port Authority
“Notwithstanding the moratorium that was put in place, when you look at the attributes of the Port of Prince Rupert, there’s arguably no safer place in Canada to do it,” Stevenson said.
“I think that speaks to the need to build trust and confidence that it can be done safely, with protection of environmental risks. You can’t talk about the economic opportunity before you address safety and environmental protection.”
Safe Transit at Prince Rupert
About a 16-hour drive from Vancouver, the Port of Prince Rupert’s terminals are one to two sailing days closer to Asia than other West Coast ports.
The entrance to the inner harbour is wider than the length of three Canadian football fields.
The water is 35 metres deep — about the height of a 10-storey building — compared to 22 metres at Los Angeles and 16 metres at Seattle.
Shipmasters spend two hours navigating into the port with local pilot guides, compared to four hours at Vancouver and eight at Seattle.
“We’ve got wide open, very simple shipping lanes. It’s not moving through complex navigational channels into the site,” Stevenson said.
A Port on the Rise
The Prince Rupert Port Authority says it has entered a new era of expansion, strengthening Canada’s economic security.
The port estimates it anchors about $60 billion of Canada’s annual global trade today. Even without adding oil exports, Stevenson said that figure could grow to $100 billion.
“We need better access to the huge and growing Asian market,” said Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute.
“Prince Rupert seems purpose-built for that.”
Roughly $3 billion in new infrastructure is already taking shape, including the $750 million rail-to-container CANXPORT transloading complex for bulk commodities like specialty agricultural products, lumber and plastic pellets.
The Ridley Island Propane Export Terminal, Canada’s first marine propane export terminal, started shipping in May 2019. Photo courtesy AltaGas Ltd.
Canadian Propane Goes Global
A centrepiece of new development is the $1.35-billion Ridley Energy Export Facility — the port’s third propane terminal since 2019.
“Prince Rupert is already emerging as a globally significant gateway for propane exports to Asia,” Exner-Pirot said.
Thanks to shipments from Prince Rupert, Canadian propane – primarily from Alberta – has gone global, no longer confined to U.S. markets.
More than 45 per cent of Canada’s propane exports now reach destinations outside the United States, according to the Canada Energy Regulator.
“Twenty-five per cent of Japan’s propane imports come through Prince Rupert, and just shy of 15 per cent of Korea’s imports. It’s created a lift on every barrel produced in Western Canada,” Stevenson said.
“When we look at natural gas liquids, propane and butane, we think there’s an opportunity for Canada via Prince Rupert becoming the trading benchmark for the Asia-Pacific region.”
That would give Canadian production an enduring competitive advantage when serving key markets in Asia, he said.
Deep Connection to Alberta
The Port of Prince Rupert has been a key export hub for Alberta commodities for more than four decades.
Through the Alberta Heritage Savings Trust Fund, the province invested $134 million — roughly half the total cost — to build the Prince Rupert Grain Terminal, which opened in 1985.
The largest grain terminal on the West Coast, it primarily handles wheat, barley, and canola from the prairies.
The Prince Rupert Grain Terminal. Photo courtesy Prince Rupert Port Authority
Today, the connection to Alberta remains strong.
In 2022, $3.8 billion worth of Alberta exports — mainly propane, agricultural products and wood pulp — were shipped through the Port of Prince Rupert, according to the province’s Ministry of Transportation and Economic Corridors.
In 2024, Alberta awarded a $250,000 grant to the Prince Rupert Port Authority to lead discussions on expanding transportation links with the province’s Industrial Heartland region near Edmonton.
Handling Some of the World’s Biggest Vessels
The Port of Prince Rupert could safely handle oil tankers, including Very Large Crude Carriers (VLCCs), Stevenson said.
“We would have the capacity both in water depth and access and egress to the port that could handle Aframax, Suezmax and even VLCCs,” he said.
“We don’t have terminal capacity to handle oil at this point, but there’s certainly terminal capacities within the port complex that could be either expanded or diversified in their capability.”
Market Access Lessons From TMX
Like propane, Canada’s oil exports have gained traction in Asia, thanks to the expanded Trans Mountain pipeline and the Westridge Marine Terminal near Vancouver — about 1,600 kilometres south of Prince Rupert, where there is no oil tanker ban.
The Trans Mountain expansion project included the largest expansion of ocean oil spill response in Canadian history, doubling capacity of the West Coast Marine Response Corporation.
The K.J. Gardner is the largest-ever spill response vessel in Canada. Photo courtesy Western Canada Marine Response Corporation
The Canada Energy Regulator (CER) reports that Canadian oil exports to Asia more than tripled after the expanded pipeline and terminal went into service in May 2024.
As a result, the price for Canadian oil has gone up.
The gap between Western Canadian Select (WCS) and West Texas Intermediate (WTI) has narrowed to about $12 per barrel this year, compared to $19 per barrel in 2023, according to GLJ Petroleum Consultants.
Each additional dollar earned per barrel adds about $280 million in annual government royalties and tax revenues, according to economist Peter Tertzakian.
The Road Ahead
There are likely several potential sites for a new West Coast oil terminal, Stevenson said.
“A pipeline is going to find its way to tidewater based upon the safest and most efficient route,” he said.
“The terminal part is relatively straightforward, whether it’s in Prince Rupert or somewhere else.”
Under Canada’s Marine Act, the Port of Prince Rupert’s mandate is to enable trade, Stevenson said.
“If Canada’s trade objectives include moving oil off the West Coast, we’re here to enable it, presuming that the project has a mandate,” he said.
“If we see the basis of a project like this, we would ensure that it’s done to the best possible standard.”
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