HOUSTON: “Why would you do this to your best friend?”
That was the question Alberta Energy Minister Brian Jean had for American officials on Tuesday after US president Donald Trump angrily doubled tariffs on Canadian steel and aluminum.
Although the tariffs on oil and gas remain largely unaffected, the escalating trade war had ripple effects through the CERAWeek by S&P Global energy conference as delegates tried to digest the growing war of words between The Donald and Ontario Premier Doug Ford.
Observers on both sides agreed it wasn’t good — for business or bilateral relations.
Jean and Saskatchewan Premier Scott Moe pressed the point during a keynote panel discussion with S&P’s head of global research, flanked alongside Stephen Lecce who is Ontario’s Energy and Electrification Minister.
In addition to potentially cutting off 20 million Americans who rely on Canadian power, the tariff threats actually harm the notion of American energy “dominance” as envisioned by Trump and his energy secretary.
That’s because northern states will be left scrambling to build infrastructure with steel they don’t have — Canada supplies about half of it — and will ultimately be forced to pay more for the privilege.
On the oil side, even a 10% tariff would force American refiners to substitute cheaper Canadian barrels with their own, which they presently export at a premium. Given that the US exports about 4 million bpd — and imports 4.2 million bpd from Canada — it’s a wash.
In fact, it hurts both American refiners and consumers by losing out on higher-value Canadian crude. Removing those American exports from the global market would compromise its leverage with allies in Europe and Asia trying to switch from Russia, they added.
And it's not true that Canada "takes advantage" of the US, Jean added. In fact, it's the US that benfits from cheaper supplies of both Alberta oil and natural gas to power its manufacturing base and export its surplus.
The same situation is repeating itself on the natural gas side, where low-cost Canadian supply is at risk of being displaced with higher cost American flows.
As a result of those threats, Canadians are having “red line conversations” about new markets and pipelines “frankly, we weren’t having three months ago,” Jean warned. “We’re looking at (pipelines in) every direction right now, except the US.”
In a separate panel discussion at the Canada House, delegates heard Canadian gas is actually more competitive in Asian markets, assuming it can get onto a slow boat to China. Shipping times from the West Coast are half of what they are from the Gulf of Mexico and the value proposition is higher owing to the lower cost of the gas.
“LNG on the West Coast, we see that as a as a compelling case for Canada when it comes to energy dominance… to that high demand area of Asia,” Trevor Ebl, TC Energy’s president of natural gas pipelines told a joint audience of Canadian and Americans at Canada House.
“If you look at the low cost, abundant supply in Western Canada and that relatively short distance to get to the West Coast, we see that as clearly kind of the premier opportunity when it comes to energy affordability (and) energy dominance for Canada.”
When asked what he would do to stop the trade war, Jean told reporters: “Drop your tariffs and get back to business.”
“That’s it?” the reporter shot back.
“That’s it,” Jean replied.