Can Canada really stop the flow of oil in the US in response to Trump’s tariffs? | Business and economy news

The Great Trade War between the United States and Canada was prevented after US President Donald Trump agreed to give up the imposition of 25 percent Tariff 30 days. But anger broke out in CanadaWith people calling for a boycott of US products, and some even invite them to stop the export of oil to the southern neighbor in the country.

However, blocking the flow of raw oil in the US could apply huge economic costs to Canada, which pumps almost all its raw oil in the US through a pipeline network.

Furthermore, it would take some time for Canada diversifying its exports after decades of close trade connections between the North American Agreement on Free Trade (Oil), which Trump negotiation During his first term of office from 2017 to 2021.

So, in theory, Canada could stop the flow of oil to the US as the influence of Trump withdrawing on tariff threats. However, this would disrupt the raw graphics supply with refineries in the east of Canada as pipelines undergoes an American territory.

How does a oil plantation work in Canada?

The main warning is that the Canadian pipeline infrastructure was set. It starts in Western Canada, where most oil is produced, but it must go through the US to reach the east side of Canada.

Most oil is produced in the sedimentary pool of Western Canada (WCSB), which consists of British Columbia, Alberta, Saskatchewan and Manitoba provinces.

Raw oil is carried out through pipelines that go through the US to reach the Canadian province of the eastern coast, including Ontario and Quebec, where it is refined. Therefore, the pipeline network, some of which were built in the 1950s, also serve refineries in the United States -Canada.

“Canada and the US have made a conscious decision to integrate their energy infrastructure,” said Gitane De Silva, former CEO of the Canada Energy Regulator (CER), for Al Jazeera. “It’s so long for a long time.”

In 1994, the US, Canada and Mexico signed a NAFTA contract, which removed most of the tariffs between three countries and included provisions on energy cooperation.

“When the agreement was ratified, there was a desire in the US to export Canada as much energy as possible,” De Silva said. The United States of Mexico-Kanada (USMCA), which replaced the oil under Trump in 2020, maintains most of NAFT’s energy provisions.

Geography also plays a role in the way of building pipelines.

“Geology and geography for the construction of pipelines from Albert to Ontario and Quebec is a bit challenging because of the continental shield and large lakes,” De Silva said. The continental shield is a zone of a really old and hard compartment of a rock that makes almost half of the Canadian land mass.

Canadian oil flows into parts of the US, such as the Middle West, where some of the refineries are located. Some of the US refineries are closer to the Canadian petroleum sites than the Eastern provinces. For example, the oil region of British Colombia is closer to California in the United States than the Canadian Province of Ontario.

How many canada oil sends in the US?

Almost all the export of oil oil – about 97 percent – was performed in the US in 2023, Cer reports.

In 2022, 60 percent of oil imports to the United States were from Canada, according to the US Energy Information Administration.

In 2024, Canada produced 5.7 million barrels of oil daily, according to the Canadian Association of Oil Manufacturers. About 4.3 million barrels of petroleum products were exported to the USA a day.

Can Canada stop sending a raw oil in the US?

Theoretically yes, but it is unlikely, experts say.

The federal government, in theory, has the authority to stop exports. But de Silva said it would be complicated because Canada is a confederation, which means that the federal government and the province share power. Oil production comes under provincial power.

“There are definitely legal issues there, because Canada has never done it before,” said De Silva Al Jazeera, adding that disagreements can cause a “homemade constitutional crisis.”

De Silva added that there is also a question of where the oil will be stored after the tap is excluded. “When the pipelines are full, it will be very difficult to find space for an additional 4 million barrels a day.”

De Silva added that if the Canadian government decides to refuse to supply the USA oil, there will also be a questionnaire about the eastern parts of Canada – Ontario, Quebec and New Brunswick. Asks questions about whether the US in turn will prevent the flow of oil, which flows through the US territory, to the eastern Canada.

According to the transit pipelines in US and Canada of 1977, no public authorities in the US or Canada set up “which are intended or what would have an effect, interference, distracting, diverting or hindrance to any way of transferring the hydrocarbons in any way transit ”.

Although violations of the agreement can be challenged in court, “with Trump’s administration, I do not know if they are focused on these international contracts,” De Silva said.

Last month, speaking at the World Economic Forum in Davos, Switzerland, Trump said, “We don’t need their [Canada’s] oil and gas. We have more than anyone. “He swore to drill more oil to make up for the potentially Canadian stopping of oil.

There are alternative ways in which raw oil can be translated from western Canada to east, including rail, truck, sea and tanker. However, De Silva said, “the pipelines are the safest way of transporting oil and gas. They are also the most effective and most payable, so it would not be a complete solution, it would not be an ideal solution, but there would be an option if necessary. “

According to 2024 CER dataThe pipelines performed 89.6 percent of Canadian raw oil. The rest was sent by Rail and other networks.

“Canada is actively looking for other export markets for their oils,” De Silva said. However, there is no solution for that overnight, she added.

Even during the previous administration of US President Joe Biden, there were concerns about the need to reform his pipeline strategy for Canada. On the first day at the office, Biden canceled the Keystone XL oil pipeline from Canada to the United States because of the care of climate change.

“It’s time for Canada to review his strategy, because we see that with a new administration now it can become very dangerous that we have only one client for our export,” wrote economist Miguel Ouellette in a report that published in 2021 in 2021. ).

The Canadian Trans Mountain pipeline operator said that if Trump spent tariffs, delivery to Asia is likely to increase, Reuters reported on Tuesday. Last year, a pipeline was expanded to bring oil to the Canadian Pacific coast, from where the oil was shipped to tankers in China, Japan and South Korea.

De Silva explained that the ban on oil exports to the US will also have a very negative impact on the Canada’s own economy. “The oil sector is the biggest driver of our economy,” she said. “Given that our biggest export market is now, I think that the federal government would think very carefully before deciding to do so, because domestic influences would be almost as considerable or considerable as influences on the US.”

What else is it?

In 2022, 79.2 percent of the refined oil of Canada came from the USA, according to data from the observatory of economic complexity (OEC).

The US imports Canadian raw oil, which is refined in the Middle West USA, and then sold in Canada and the rest of the world.

De Silva said that one of the arguments that Canada presents to prevent the United States to betray Tariffs that “Canada exports affordable, reliable, safe energy produced with high environmental standards and dedication to human rights, [and] Sells it now -us discount. Then, US refineries buy it, perfect and send it to Canada and the rest of the world with a significant cost tag. “

Larger tariffs could make fuel expensive, pushing inflation. They could also influence the export-oriented sectors, which would lead to job loss-which would adversely affect the Liberal Party of Prime Minister Justin Trudeau, face the election later this year.