The Trump administration's pursuit of energy dominance has created ripples across international borders, prompting Canada's largest oil producer, Alberta, to reconsider its strategies. The underlying need for a robust strategic petroleum reserve in the U.S. has led to tariff threats, causing significant disturbances in the North American energy landscape. As a response, Canada is actively exploring alternatives to diversify its oil export destinations.
In light of these developments, Canada is examining three pipeline proposals to its West Coast. This initiative aims to reduce dependence on the U.S., given that nearly all Canadian pipelines currently run south. There is only one existing pipeline from Alberta to the West Coast in British Columbia, which provides access to Asian markets. Alberta is actively engaging in discussions with South Korea, Japan, and several European nations about potential oil exports.
Premier Doug Ford has taken a firm stand against Trump's tariffs by imposing a 25% surcharge on electricity exported to the U.S. This move highlights growing tensions and the need for Canada to find new markets for its resources.
Alberta, the heart of Canada's oil production, is not keen on adopting measures similar to Ontario's surcharge strategy. Instead, it seeks to maintain its role as a key energy supplier to the U.S., contributing to its strategic goals, such as achieving dominance in artificial intelligence over China. Canada stands as the fourth-largest oil producer globally, with Alberta contributing significantly—87% of Canadian oil exports to the U.S. in 2023.
Uncertainties stemming from the Trump administration's tariff threats necessitate Alberta's exploration of alternative markets beyond North America. Brian Jean, a prominent figure in Alberta politics, underscored the importance of maintaining a steady supply line to the U.S., stating:
"It also means that they have to be able to continue to get a good steady supply of product from Canada," – Brian Jean
Jean also expressed concern for those potentially affected by tariff-induced price changes, highlighting the broader impact on consumers:
"It's going to be felt by all parties and frankly there's many people right now […] that can't afford it," – Brian Jean
Canada's exploration of new markets is driven by the need to mitigate risks associated with over-reliance on a single trade partner. With 97% of its 4 million barrels per day (bpd) of oil exports heading to the U.S. in 2023, diversification becomes crucial. Danielle Smith, another key voice in Alberta's energy sector, noted the emergence of several projects within Canada, poised to take action should partnership agreements with the U.S. falter:
"There are at least six or seven projects that are emerging in Canada in the event we're not able to come to a partnership agreement with the U.S." – Danielle Smith
Smith reassured stakeholders regarding compliance with trade agreements, minimizing concerns about potential tariffs on Canadian oil:
"I would imagine that they've all called their lawyers and they're in compliance. I wouldn't expect very much of our oil and gas is tariffed at all." – Danielle Smith
The Trump administration's lack of clarity on how much of Canada's energy exports conform to existing trade agreements adds another layer of complexity. This uncertainty has catalyzed Alberta's efforts to identify viable markets outside the U.S., particularly in Asia and Europe.