Oilpatch industry groups unite to fight US tariffs

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Canada’s disorganized response to Donald Trump’s threat of tariffs, and fears within the oilpatch that Ottawa could target energy exports as retaliation, have prompted the country’s five largest energy-focused organizations to band together in the face of a potential trade war. and the United States.

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The Canadian Association of Petroleum Producers (CAPP), the Pathways Alliance, the oil industry organization Enserva, the Explorers and Producers Association of Canada and the Canadian Association of Energy Contractors on Monday announced plans to coordinate a working group to push back on Trump’s threat of 25 per. tax on all Canadian goods.

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“Canada is not where it needs to be in preparing for major trade negotiations with someone like President Trump,” said CAPP president Lisa Baiton. “Normally at this point, there would be official industry tables that feed into Team Canada’s thinking and positioning, and since that hasn’t happened yet … we created our own table.”

Part of the fear gripping Canada’s oil and gas sector, which accounts for a quarter of all Canadian exports, is that energy exports could be weaponized if a trade war erupts between the two countries.

Minister of Foreign Affairs Mélanie Joly on Sunday said “everything is on the table” when asked during an interview on CTV’s Question Period about whether her government is willing to cut off electricity to the US.

Ottawa previously signaled it would consider imposing export tariffs on oil, potash and uranium if the Trump administration follows through on its threat to apply blanket tariffs on Canadian goods.

“A move like that would simply replicate and amplify the negative effects of US import tariffs. To put it another way: double taxation,” said Baiton.

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He said a tariff or import tax on Canadian crude (or both) would weaken Canadian oil prices, reduce investment and production, while increasing unemployment and consumer spending.

“We are in this situation because we are always locked in one customer who is willing and ready to represent this situation compared to Canada,” said Baiton.

“Canada needs to wake up. We need to diversify our international customer base, not just for energy, but for all Canadian projects. We have to build pipelines, we have to speed up LNG export facilities, we have to think about ports and anything that gives us direct access to world markets without having to go through the US”

The working group, which represents more than three-quarters of Canada’s oil and gas production and hundreds of businesses, said it is providing its expertise to provincial and territorial policymakers to come up with strategies to avoid or reduce the risk of the US tax.

It said it also plans to communicate with American industry partners and other influential representatives in the US

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The group includes various parts of the oil and gas industry that sometimes disagree on key areas, including net-zero policies, but the industry is largely aligned with the threat of tariffs.

Canada’s largest oil sands industry group, Pathways Alliance, pointed to the long-standing trade relationship between the two countries and Canada’s importance as a supplier, providing the US with more than half of its petroleum imports by 2023.

“Canada’s oil sands are the cornerstone of North America’s energy security, and prices will hurt people every day on both sides of the border,” Pathways president Kendall Dilling said in a statement.

Many US refineries, particularly in the Midwest, are geared up to process Canadian heavy crude and have few other sources of supply. Experts say the sudden increase in Canadian oil prices will hurt border refining and force higher prices for gasoline, diesel and jet fuel in the US.

Weekly Canadian crude oil purchases in the US hit their highest level in the first week of January, according to data from the US Energy Information Administration.

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The deepening integration of energy systems in North America through cross-border infrastructure and commercial systems had previously prompted some experts and market observers to speculate that Canadian oil and gas could be exempted from Trump’s tariffs.

But Canada’s oilpatch appears willing to heed Alberta Premier Danielle Smith’s warning on Monday — following her informal meetings with Trump at his Mar-a-Lago residence over the weekend — that Canada “needs to be fixed” that tariffs are coming.

“We don’t seem to have resolved this situation, despite the best efforts from other governments,” said CPAC president Tristan Goodman, praising Smith for reaching out directly to the incoming US president.

“But it’s coming up on inauguration day, and because of the lack of a solution, we thought it was important to be quick.”

• Email: mpotkins@postmedia.com
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