In a recent speech, Prime Minister Mark Carney emphasized the significance of Canadian natural gas exports to fueling American growth. Speculation arises about the potential impact if Canada were to cease sending shipments south of the border amid the ongoing Canada-U.S. trade tension.
Despite the escalating trade war, energy products like oil and natural gas have not been utilized as bargaining tools between the two countries. The suggestion of using energy supplies as leverage has stirred controversy, with Alberta Premier Danielle Smith consistently opposing the idea, while Ontario’s Doug Ford advocates for keeping all options open.
Carney highlighted that the U.S.’s reliance on Canadian energy is substantial, stating that Canada supplies 99% of their natural gas imports, 85% of their electricity imports, and 60% of their crude oil imports. The heavy dependence on imports, particularly for natural gas, is evident in the statistics from the U.S. Energy Information Administration (EIA), which reported that Canadian imports accounted for nearly all non-domestic natural gas supply to the U.S.
Dulles Wang, director of Americas gas and LNG at Wood Mackenzie, suggests that Canadian natural gas shipments to the U.S. represent a smaller percentage compared to domestic production. However, the geographic distribution of these deliveries is crucial, with regions like the Pacific Northwest heavily reliant on Canadian gas imports.
Halting natural gas exports to the U.S. would have adverse effects on the Canadian industry, potentially leading to an oversupply within the country and a subsequent price collapse. The move could significantly impact the Canadian economy, as the U.S. is currently the primary market for Canadian natural gas.
To diversify its energy exports, Canada has been exploring alternative markets such as Asia. Initiatives like the LNG Canada facility in Kitimat, B.C., have started shipping liquefied natural gas to Asian markets, aiming to reduce dependency on the U.S. market.
The government’s ongoing support for major energy projects, including the expansion of LNG facilities, reflects a commitment to reduce reliance on the U.S. market and foster energy export diversification.