Canada should get ready for 25% tariffs on oil exports to US: Alberta premier

Alberta's crude oil producers -- and some US refiners -- should brace for a 25% tariff on Canadian crude exports to the US likely to be introduced Jan. 20 by the incoming new US administration, provincial Premier Danielle Smith said Jan. 13.

With nearly 50 refineries in the US depending on Western Canadian crude as feedstock, a tariff on Canadian crude would eventually drive up gasoline prices in those states, Smith told CTV News following her meeting with the US President-elect Donald Trump over the weekend at his Mar-a-Lago compound in Palm Beach, Florida.

Alberta is home to 4.2 million b/d of heavy and light oil production and 17 Bcf/d of natural gas, with the province exporting 94% of its output to the US, according to the latest ATB Financial research note of Jan. 10.

Smith said Canada's energy exports serve as a bargaining chip.

"Canada should have a tariff-free relationship with the US, and the bedrock of that should be energy," she said. "We actually sell discounted oil to the US and they upgrade it. So, a $100 billion of Canadian exported oil is turned into $300 billion worth of value-added product. I feel the more we make those arguments, surely we will be able to make the case that we should continue to enjoy a tariff-free relationship."

"Our job is going to be to work overtime so that we can make the case for carve-outs and I wanted to begin that conversation," Smith said. "We have an integrated market system through the Enbridge and TC Energy pipelines and we have a product that goes through the border every single day."

Ottawa meeting of premiers

Oil and gas will be key to Canada being successful in achieving a breakthrough once the tariffs come in and then getting them rescinded, Smith said, pointing out there is a strong case to be made out of the benefits that derive to Americans in terms of employment from the US-Canada relationship.

Separately, Canadian Prime Minister Justin Trudeau has convened a meeting in Ottawa on Jan. 15 with all provincial premiers to frame a strategy to deal with the likely 25% tariffs on all Canadian goods.

Opinion is divided with Ontario Premier Doug Ford suggesting the halting electricity exports as part of an overall Canadian energy embargo on exports to the US.

If there is a 25% tariff, there has to be a Canadian response. But a preferred route would be to avoid such a scenario, Smith said.

The verdict is still to be delivered on how oil companies in Alberta will be definitively impacted by the US tariffs.

"We remain focused on how we operate the business and have that is through low-cost and effective operations," Canadian Natural Resources President Scott Stauth said last week while releasing the company's 2025 budget.

"We have low-cost barrels that we continue to deliver especially from our SCO and mining operations in Alberta," Stauth said. "Those operations are competitive and we have built ourselves a resilient business here that is sustainable."