Trump doesn’t want Canadian oil, but industry expert says the U.S. still relies on it

U.S. President Donald Trump told the World Economic Forum that America doesn’t need Canada for critical imports, including Alberta oil. Tyson Fedor explains.

President Donald Trump says the United States doesn’t need Canadian oil and gas, but an Alberta industry expert is disputing those claims.

On Thursday, Trump spoke to the World Economic Forum, claiming the U.S. can sustain itself without Canadian resources.

“I say you can always become a state, and if you’re a state, we won’t have a deficit; we won’t have to tariff you,” Trump said.

“We don’t need their oil and gas. We have more than anybody.”

Richard Masson, an executive at the University of Calgary’s School of Public Policy, suggests Trump needs a reality check.

“It’s not factually correct,” he said.

“They do need our oil. We ship diluted bitumen, so four million barrels a day go to the states; more than two million barrels a day of that is diluted bitumen. It goes to refineries that are specifically configured to process it, especially in Minneapolis, Chicago and Wood River.”

Masson adds that he believes refineries are educating the president on why Alberta crude is still needed.

“They absolutely need the quality of oil that we have,” said Masson.

“That’s why they rely on it so heavily. So, the first part is hopefully we can talk to him and educate him if he doesn’t understand it. I’m sure that the big refiners in the U.S. are doing that now. But if it turns out that he’s going to put a tariff on it, then our challenge will be what happens to overall demand.”

Potential tariff impact

While the Alberta oil and gas industry has seen some growth since the Trans Mountain Pipeline (TMX) was expanded, those gains could be wiped out if the U.S. implements a tariff on Canadian products.

The expanded TMX is already demonstrating significant economic benefits for Alberta, according to a report from Alberta Central chief economist Charles St-Arnaud.

The report says since its completion in May 2024, the pipeline has facilitated a substantial increase in Canadian oil exports, particularly to markets beyond the United States.

St-Arnaud says it has narrowed the price differential between Western Canadian Select (WCS) and West Texas Intermediate (WTI), a key benchmark for oil prices.

He estimates that the narrower oil spread, now closer to $12 a barrel due to TMX expansion, increased oil revenues in 2024 by approximately $10 billion.

He says it represents a significant boost to the Alberta economy, equivalent to adding an extra month of oil production to the year.

“We’ve seen a doubling of Canada’s exports of oil outside of the U.S., but also we’ve seen an increase of usage of Canadian oil by the West Coast refineries from about 20 per cent of their needs to almost a third of their needs,” said St-Arnaud.

St-Arnaud’s report warns that potential U.S. tariffs on Canadian oil could reverse gains made by the first six months of the TMX expansion.

“If all of that got pushed back to Alberta because we don’t have enough storage or alternatives, that would cost Alberta $10 billion over the course of a year and blow a huge hole in our budget and put us in deficit,” said Masson.

The report suggests that an export tax on oil, with revenues returned to the province, could mitigate some of the negative impacts of potential U.S. tariffs.

Premier Danielle Smith, who spent five days in Washington lobbying U.S. lawmakers about the province’s plan to double oil and gas production, responded to Trump’s comments in a statement.

“The premier’s message has not changed,” said Smith’s press secretary Sam Blackett.

“In a negotiation, both sides will say all kinds of things and use different tactics. It’s important when this happens to remain calm and diplomatic while continuing to carry out Alberta’s and Canada’s strategy. The premier will continue to do so.”

Ontario Premier Doug Ford says Canada has hamstrung itself by not diversifying its oil and gas.

“It’s unacceptable that we don’t have (the) Energy East pipeline coming out to Ontario now to New Brunswick,” he said Wednesday.

“And again, the northern gateway going out through B.C.”

But Masson says those projects will not happen.

“The problem is windows open and then they close. The Energy East window is closed. It isn’t coming back,” he said.

“(TMX) was more than six times over budget and years late. So, anybody who’s thinking about Northern Gateway now will have to look at that experience and say, ‘Give your head a shake.’”