Canada stands as the United States' dominant supplier of foreign oil, contributing more than half of the total 2.4 million barrels of oil imported daily by the US. Every day, the US imports 1.4 million barrels of Canadian crude. Additionally, the United States relies heavily on Canadian hydropower, regularly importing electricity from Ontario, Quebec, and British Columbia. Last year alone, Canada provided 33.2 million of the 38.9 million megawatt hours of electricity imported by the US, amounting to approximately $3.2 billion in power purchases—a significant decrease of nearly 30% from 2022.
Despite Canada's critical role in supplying energy to the US, Premier Doug Ford of Ontario has threatened to cut off electricity exports to states like Michigan, New York, and Wisconsin. This bold statement has sparked concerns over potential disruptions in energy supply, particularly for US states along the Canadian border that occasionally depend on Canadian electricity imports.
“We will go to the extent of cutting off their energy going down to Michigan, going down to New York State and over to Wisconsin,” – Premier Doug Ford of Ontario
The prospect of severing these energy ties raises several questions about the implications for both nations. The United States has seen a surge in domestic oil production due to the shale revolution over the past two decades. This increase has positioned the US as a leading oil exporter, suggesting that it might withstand a shortfall in Canadian oil with relative ease.
However, experts warn that a sudden disruption could lead to challenges for specific regions within the US. Some refineries in the Midwest and Great Lakes areas rely significantly on Canadian crude to produce gasoline, diesel, and jet fuel. Analysts note that oil currently destined for overseas markets might be redirected to domestic use if Canadian imports were suddenly halted.
“I’d be more worried about supply than price,” – Patrick De Haan, head of petroleum analysis at GasBuddy
Despite these potential issues, the federal government in Ottawa would need to approve any measures taken by provinces such as Ontario to cut off oil exports to the US. The major oil-producing provinces have not indicated a willingness to engage in such drastic actions.
“No, because it would hurt everyone involved,” – Robert Yawger, vice president of energy futures at Mizuho Securities
Premier Ford's comments highlight the potential economic consequences for both countries. While Canada plays a crucial role in providing energy resources to the US, cutting off these exports could negatively impact its own economy.
“Canadians get hurt, but I can assure you one thing: The Americans are going to feel the pain as well, and isn’t that unfortunate,” – Premier Doug Ford of Ontario
The US Energy Information Administration underscores the importance of this cross-border trade for balancing electricity supply and consumption across both nations' power grids.
“The trade is important to grid balancing – constantly matching electricity consumption to electricity production — and helping to shore up electricity supply,” – The US Energy Information Administration
Despite these tensions, some experts believe the US may have sufficient capabilities to manage such disruptions. The existing interconnected power system between the two countries facilitates this resilience.
“Even in an extended outage the US has the ability to add more generation capacity in a relatively short period of time,” – Johnston
“Power transmission lines linking the United States and Canada are part of a complex and highly interconnected power system, with connections spanning New England to the Pacific Northwest,” – The US Energy Information Administration
Nonetheless, any shift in this closely-knit relationship could result in significant inconveniences for both parties involved.
“This is a threat that shouldn’t be ignored. Canada doesn’t want to take this lying down,” – Patrick De Haan, head of petroleum analysis at GasBuddy
