Canadian Petroleum Supplies to the US

Canada Supplies Nearly Twice as Much Petroleum and Petroleum Liquids to the US as Mexico, Russia, Saudi Arabia, and Colombia Combined.

Russia’s war on Ukraine has prompted many countries, including the US, to look for alternative energy sources. But Americans often forget that our largest foreign supplier of oil is right next door—Canada— and it has the capacity and willingness to increase production.

According to the US Energy Information Agency, in 2021, Canada supplied 62% of all US crude oil imports. In fact, our northern neighbor supplies more than half of our total imports of petroleum and petroleum liquids. The International Energy Agency estimates that Canada is the world's fifth largest producer of oil and holds the third largest proven oil reserves. Canada’s energy regulator reports that in 2021 the country produced 4.4 million barrels of crude oil per day, and could exceed 6.5 million daily barrels by 2050.

The key word is could. Canadian oil exports are constrained by pipeline capacity. Today, only one pipeline—the Trans Mountain pipeline to Vancouver—connects the Canadian oil sands to the sea. The rest of the existing pipeline network links to refineries in the United States where Canadian oil is sold at a discount of as much as $20 a barrel compared to the West Texas Intermediate benchmark price. Part of that price gap is because Canada’s oil has nowhere else to go. A discount sounds like a positive thing for consumers…but it reflects a disincentive to produce more supply.

Canadians realize this, but attempts to add pipeline capacity have been thwarted by political opposition in both countries. Pipeline politics are challenging, but the stubborn fact is that the United States could either import “democratic oil" from our friends in Canada or get it from elsewhere …including places that aren’t always friendly to the US or our interests. If we cannot build more pipeline capacity for Canadian oil imports, we will not have a choice.