It’s a trend that has been developing gradually, but the United States is increasingly producing more of its own energy needs and reducing its dependence on imports from the Middle East and other countries.
That’s a good development in terms of U.S. economic stability, but it should be a wake up call to Canada because the U.S. is essentially the only market for Canada’s oil and gas exports at the moment.
Some reports have raised the possibility of the U.S. becoming “energy independent” within the next couple of decades thanks to rising domestic production and declining demand.
That fact has some industry observers advocating for more pipelines to the B.C. coast to tap the rapidly expanding energy markets in Asia.
TD Economics weighed in Thursday with a report by economist Leslie Preston, who says there is a “need for access to export markets other than the U.S. if Canada’s oil and gas sector is to meet its growth potential.”
Since 2005, the U.S. has decreased its oil imports by 30 per cent, as demand has fallen 13 per cent and domestic oil production has risen 15 per cent, she says.
So far, Canadian oil producers have not been stung by the decline. In fact, their shipments of crude and petroleum products have actually increased. Canada now provides 25 per cent of U.S. imports, behind OPEC’s 40 per cent share. But it’s doubtful that the rise in exports will keep up with the growth potential of the Canadian petroleum industry.
With both Canada and the U.S. already essentially independent in natural gas, Ms. Preston says that by 2035, Canadian gas shipments to the U.S. will be 62 per cent less than they are today.
However, oil independence will remain more elusive for the U.S., she adds.
“The challenge for Canada is the basket is clearly shrinking. That limits growth of Canada’s oil sector if it remains solely reliant on U.S. markets,” Ms. Preston wrote.
“The clear gap between the growth potential for Canadian production, particularly for oil, and projected U.S. demand shows that without greater access to export markets outside of North American, the growth trajectory of Canada’s oil and gas sector could look quite different from what it has been in recent years.”