Cross-border petroleum trade between the United States and Canada has doubled over the past decade, which the American Petroleum Institute (API) says underscores how critical a role energy infrastructure between the two countries plays in the energy security of both.
Those are the findings of a new report released Tuesday by the institute, which is the largest U.S. trade association for the oil and natural gas industry. It comes in light of a push for green infrastructure in the States through a US$2.3-trillion spending package announced by President Joe Biden last month, and as the Michigan government continues its fight to close down the Enridge Line 5 pipeline, which carries oil from Western Canada through Great Lakes states to Ontario.
The study found the trade relationship works both ways, with each country relying on the other for approximately 15 per cent of its total petroleum liquids supply. Volumes in both directions are dominated by crude oil.
U.S. and Canadian petroleum markets have also become increasingly integrated, according to the report, with imports of U.S. crude oil by Eastern Canadian refineries increasing tenfold between 2009 and 2019.
Today, U.S. crude accounts for more than 45 per cent of total crude refined in Eastern Canada. In addition, the study found that much of the domestic crude at those facilities is shipped from Western Canada on pipeline systems that pass through the U.S. before entering Eastern Canada.
In total, roughly 80 per cent to 90 per cent of all oil refined in Eastern Canada either comes from or passes through the United States.
Frank Macchiarola, a senior vice-president with the API, told The Globe and Mail in an interview even he was surprised by the magnitude of the trade relationship, which accounts for 10 per cent to 20 per cent of total U.S.-Canada goods trade.
In 2019, U.S.-Canada petroleum liquids trade hit US$96 billion – almost as large as the total trade in vehicles between the two countries – and reduced both countries’ reliance on oil from OPEC countries.
“It’s staggering to consider,” Mr. Macchiarola said.
Mr. Macchiarola said the study underscores just how integrated the two countries’ energy systems are, and how important each country is to each other – particularly after Mr. Biden’s “disappointing” decision to nix the presidential construction permit for the Keystone XL pipeline.
“We think it’s important to highlight that oil and gas infrastructure is essential to our nation’s economy and energy security, and certainly highlight the relationship with Canada,” he said.
Policy makers have talked about North American energy security for years, Mr. Macchiarola told the 2021 Scotiabank CAPP Energy Symposium Tuesday morning.
“Now we have it. We have it because of this important trade relationship, coupled with the ingenuity of the oil and natural gas industry on both sides of the border,” he said.
“We must collectively urge policy makers to value this partnership and to promote this important trade relationship that has been so beneficial to our two great countries.”
With Mr. Biden’s administration committed to examining energy issues and climate change (its recently announced infrastructure plan included upgrades to the electrical power grid, for example, and it plans to build 500,000 electric-vehicle charging stations), Mr. Macchiarola told The Globe it’s important to highlight the how essential cross-border oil and gas infrastructure is to the U.S.
To that end, he said the study was – first and foremost – designed to educate the public.
“At the end of the day, policy makers are responsive to the public. If the public understand what’s at stake with these decisions on infrastructure, they will in turn influence policy makers to rethink these decisions in order to re-examine an issue from a different perspective,” he said.
“We’re trying to provide that different perspective.”
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