Facing President Trump’s tariff threats, Canada’s Alberta province, the nation’s largest oil producer, presented two scenarios for North American energy cooperation. One involves a strengthened U.S.-Canada energy partnership, increasing oil exports to the U.S. to bolster its global energy dominance and maintain low consumer prices. Alternatively, continued trade conflict could lead Alberta to diversify its oil exports to Asia and Europe, impacting the deeply integrated North American energy market. This diversification is already underway, with active discussions with several countries outside of the U.S. The choice hinges on the resolution of the ongoing trade dispute.
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Following President Trump’s threatened tariffs, Natural Resources Minister Jonathan Wilkinson highlighted Canada’s energy infrastructure vulnerability, specifically its reliance on U.S. pipelines for oil transport to Ontario and Quebec. This dependence necessitates discussions regarding the feasibility and necessity of a new west-to-east pipeline to enhance energy security. While not advocating for immediate construction, Wilkinson suggests exploring this option, emphasizing the need for inclusive consultations with Indigenous communities and other stakeholders. The Trans Mountain expansion, bypassing the U.S., serves as a positive example of such energy diversification.
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The successful expansion of the Trans Mountain pipeline, enabling increased Canadian oil exports to China and Japan, is prompting consideration of further decoupling from the U.S. market. This renewed interest stems from concerns over U.S. trade unpredictability and is fueling discussions to revive stalled pipeline projects like Energy East and Northern Gateway. While these projects face significant hurdles, including environmental opposition and high costs, expanding Trans Mountain’s capacity presents a quicker alternative to increase exports and capitalize on growing Asian demand. This shift is already impacting global oil markets, with Canada’s crude increasingly replacing that from sanctioned nations.
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John Q. Hosedrinker