In May 2024 Canada’s
Trans Mountain Pipeline completed its expansion from 300,000 Bbls of oil/day
capacity to 890,000 Bbl/day capacity. U.S. crude oil imports from Canada
reached a record of 4.3 million barrels per day (Bbl/d) in July 2024 following
the expansion of Canada’s Trans Mountain pipeline. As indicated in the second
graph below U.S. West Coast refineries as well as Asian importers bought most
of the new volumes coming from Alberta to the Pacific coast.
“The U.S. West Coast imported 498,000 b/d of crude oil in
July 2024, according to our PSM, a record high for the region and an increase
of 115% compared with July 2023.”
Western Canada Select
(WSC) is sold at a significant discount to Brent oil due to its lower quality in
the form of higher sulfur content and lower API gravity. In addition to that
the oil source is landlocked due to geography and must be pumped via pipeline a
long way to sales, either on the Pacific coast, to U.S. Midwest refiners, or
to the U.S. Gulf Coast. The price differential is significant, sometimes over
$20. The price differential is also seasonal as Midwest U.S. refineries shut down in the fall for maintenance. There is some indication that the differential has
dropped as the connection to the Pacific coast has given Canadian producers
some optionality to cushion the seasonal loss of sales volumes due to Midwest refinery maintenance.
Trump’s
predilection to rule by threat, intimidation, and unpredictability, recently
shown by his threat of 25% tariffs on Canadian goods, would be painful to both Canada and the U.S. Of course, it is unlikely to happen. The U.S.
relies on Canadian crude oil. Canada is by far our biggest foreign oil supplier,
most of which can be which can be delivered by pipeline to U.S. refineries,
which are outfitted to process it. It is nice that we can get so much of our
oil imports from a nearby and friendly country with few geopolitical risks. Trump
seems mostly concerned with attaining trade balances with friendly countries
like Canada and the E.U. It is perhaps a valid point to question why we are
buying more than we are selling. Trump wants the E.U. to buy more U.S. oil
& gas to reduce the deficit. In addition, the EU now requires that the oil
and gas they buy has some level of verifiable compliance with environmental
best practices and labor laws. U.S. oil & gas meet those requirements
better than other sources. However, the E.U. as a whole and their individual countries also have to consider their own economic situation in that their cost to import
LNG is significantly higher than the cost of pipelining it from Russia or anywhere
else.
In October 2024
the U.S. got 58.3% of its oil imports from Canada. Imports account for about
40% of U.S. oil and petroleum products consumption. That means that about 23.2%
of the oil we consume in the U.S. comes from Canada. It also means that about 83%
of the oil consumed in the U.S. comes from either the U.S or Canada.
The U.S. is since
2020 a net exporter of crude oil. That gives us a positive trade balance metric
as well as improving our energy security by sourcing more crude domestically.
As can be seen
below U.S. oil imports peaked in 2005, dropped, had another small peak during
Trump’s first term, dropped to all-time lows during the pandemic, and have
risen a bit since then.
Crude oil imports to the United States in selected years from 2000 to 2023 (in million barrels)
Total petroleum exports from the United States in selected years from 1950 to 2023 (in 1,000 barrels per day)
References:
Crude
oil imports from Canada reached a record after pipeline expansion. EIA. Today
in Energy. October 30, 2024. Crude oil imports
from Canada reached a record after pipeline expansion - U.S. Energy Information
Administration (EIA)
Petroleum
and Other Liquids: U.S. Imports by Country of Origin. EIA. U.S.
Total Crude Oil and Products Imports
US Oil
Imports Data by Country, Top US Oil Importers & Buyers List. U.S. Import
Data. November 23, 2024. US
Oil Imports Data by Country, Top US Oil Importers & Buyers List -
USImportData - US Import Export Data
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