President Trump made headlines recently by saying that the U.S. doesn’t need Canadian oil. If history is any indication, though, they certainly do.
Since the early 2010s, the U.S. has ramped up domestic production by a whopping 144 percent—largely thanks to improvements in “fracking” technology. And that has made the U.S. far less reliant on other countries for its energy needs.
But, even so, a third of U.S. crude oil is imported, and they’re more reliant on Canada than ever before to supply it. In fact, over 60 percent of U.S. crude oil imports come from Canada—up from less than 5 percent in the early 1980s. In volume terms, Canada sends the U.S. about 4 million barrels a day. That’s almost twice as much crude as it did just 15 years ago and quadruple the amount of 30 years ago.
No other country even comes close. The U.S. imports just over 400,000 barrels per day from its top non-Canadian source which is currently Mexico—only 10 percent of what Canada supplies and the lowest share since the early 1970s. Once-major players like Saudi Arabia and Venezuela are now on the sidelines.
Americans may not realize how much things have changed since their high school social studies class. Polling suggests that what is common knowledge to Canadians—that Canada supplies much of the U.S.’s crude oil—is not for Americans.
Is that the case for President Trump? It’s unclear whether the “we don’t need Canadian oil” line is a genuine belief or just one of his negotiating tactics. Either way, it’s wrong.
If instead what he is getting at is a long-term goal to ramp up production domestically—a key point made in his executive order declaring a National Energy Emergency—they’d have their work cut out for them. Just to replace Canadian oil would require a 30 percent increase in production, on top of the gains already made. And businesses drill based on profitability: unless consumer prices rise significantly, there’s little incentive to ramp up production. But unless President Trump wants higher prices at the pump, the U.S. will continue relying on Canadian oil—whether he likes it or not.
A version of this post was originally published by the Business Council of Alberta at businesscouncilab.com.
Alicia Planincic is the Director of Policy & Economics at the Business Council of Alberta. She regularly provides insight and analysis on the Canadian economy, public finances, labour markets, equity and social mobility, and public policy.
