With so much speculation around political changes in Canada and the United States, and how incoming leaders will address the energy transition, it’s easy to get carried away by the stories about expansion to Alberta’s oil and gas production and export markets. The reality is much less certain.
Emboldened by an appointment to measure the drapes at Rideau Cottage, the Conservative Opposition Leader Pierre Poilievre recently said that he has already spoken with Alberta Premier Danielle Smith and, when he assumes office later this year (although they still must first win the election), he will rubber stamp oil and gas energy projects to get the ball rolling to expand energy production in Alberta.
He has a natural ally in Alberta Premier Danielle Smith, who is equally enthusiastic about the future of the oil and gas industry. It’s almost as if they were drinking from the same jug of Kool-Aid, so passionate they are about an industry whose decline is predicted to be just a decade, if not mere years, in the future.
Poilievre’s bold statement aligns with Premier Smith’s stated ambition to double export capacity through Enbridge’s pipelines, and her myriad plans to expand the export of bitumen and other petroleum products to the United States.
What is missing from all of these ambitious ideas about investing in more oil and gas is a crucial question: who is going to buy what we’re selling?
Not US President-Elect Donald Trump. According to the incoming President, the US doesn’t need anything from Canada. Nada. Zip. Zero.
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The Elephant in the Room
Donald Trump is the elephant in Stornoway – the Official Opposition Leader’s residence – and in the Office of the Alberta Premier. Poilievre has stated that he will increase the export of electricity to the US, helping to feed the massive glut of data centres coming online to serve the AI universe.
However, electricity isn’t likely what Premier Smith is thinking about, given that crude petroleum made up the majority of Alberta’s exports – 73% – totalling $113.4 billion.
Canada supplies 4.42 million barrels a day of oil to the US, or 52% of the US total energy imports. In return, America exports about 0.8 million barrels a day of oil to Canada, constituting eight per cent of their total oil exports. The US imports oil from 86 countries, but currently, Canada plays an outsized role in this import market.
With President-elect Trump threatening a 25% tariff on all Canadian exports to the United States starting on January 20th, it’s difficult to see how Canada’s massive oil exports won’t be crippled, and with them Alberta’s one-track economy.
The next biggest supplier of oil to the US is Mexico, with less than one per cent of the US market, and they are also in Mr. Trump’s crosshairs for tariffs.
The remaining 3% of Canada’s crude oil exports go to non-U.S. destinations, including China, the Netherlands, the United Kingdom, Germany, Spain, France, Norway, Italy, and Hong Kong.
Nearly all of Canada’s eggs are in one basket. That basket has holes in it.
Where are we, exactly?
Just how much damage Trump is willing to self-inflict on the American people for ideological purposes remains to be seen. He has promised to cut energy prices in half in the first 18 months of his Presidency, but the US itself is just one cog in a complex wheel of international energy pricing, and experts doubt that his combination of domestic “drill baby drill” rhetoric and bullying of his neighbours and primary oil importers will succeed.
Which leaves us exactly where? Nobody knows. Welcome to 2025.
Premier Smith and Official Opposition Leader Poilievre have big plans for the expansion of Canada’s oil and gas industry, and their supporters and donors in that business must be both excited by the opportunity to make even more money on top of their outrageous profits, and nervous wondering where they are going to sell that product.
What worries me the most is that nobody in industry or in government seems all that concerned about inevitably declining future markets, but are instead betting Alberta’s future economy on momentum and wishful thinking.
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