Pumpjacks draw out oil and gas from wells near Calgary on Sept. 18, 2023.Jeff McIntosh/The Canadian Press
On Thursday morning, I received several e-mails on the subject of meeting U.S. president-elect Donald Trump’s tariff threats by blocking energy exports – electricity, gas and, above all, oil.
Some of my correspondents were supportive. Some were opposed. But all recognized the urgent need for a game plan. Because on Monday, Mr. Trump becomes president again.
Blocking energy exports, especially oil, is Canada’s most powerful economic weapon. It’s our atomic bomb.
But this weapon, if it ever has to be used, won’t necessarily restrict its damage to the U.S. economy. It could be dangerously radioactive for Confederation.
The fallout could take the real but limited economic harm from threatened Trump tariffs and escalate it into an existential threat to the country – precisely what Mr. Trump is dreaming of when he goes on about little us becoming his 51st state.
The U.S. has long been a buyer of Canadian energy, and Canada has always been happy to sell. Last year, Canada exported $2.8-billion worth of electricity to the U.S. (That’s down from $5.8-billion in 2022 – we also imported $1.3-billion in electric power from the U.S. last year).
As Liberal leadership candidate Mark Carney told Jon Stewart, electricity from up North is powering The Daily Show’s Manhattan studio. And as former prime minister Jean Chrétien joked to Radio-Canada, cutting off hydro power from Quebec to New York would force Mr. Trump to walk up the stairs of Trump Tower by candlelight.
Ontario Premier Doug Ford has been vocal about his willingness to hit back at any American tariffs by cutting the electric cord.
But Canada’s biggest energy export, by far, is oil. It dwarfs electricity. In 2023, Canada exported $124-billion of oil. Ninety-seven per cent of it went to the United States. Nearly all of it came from Alberta.
Canada also imports oil from the U.S., but about 10 times as much flows in the other direction. Many U.S. refineries are set up to process heavier Canadian oil, not mostly lighter U.S. crude.
This long-standing arrangement benefits the American oil industry, the U.S. economy and U.S. consumers, as Canadian oil backfills for the profitable export of American oil to the rest of the world. Everyone wins, and given that landlocked Canadian oil sells at a discount, the U.S. is the bigger winner.
But that whole ecosystem breaks down if the flow of Canadian oil stops. There would be idle American refineries, shortages at U.S. gas pumps and higher U.S. gasoline prices.
As with all nuclear weapons, this one’s best use is as a deterrent. Canada is trying to persuade Mr. Trump against launching an economic first strike against us, by pointing out that we can deliver painful retaliation.
But Alberta Premier Danielle Smith is against even brandishing the oil weapon, let alone using it. After Wednesday’s meeting of premiers and the Prime Minister, she declined to sign a national statement on preparations for both conciliatory and “retaliatory measures” against possible U.S. tariffs, because it did not explicitly reject the use, or the threat, of export controls on oil.
Even if you don’t like the game Ms. Smith is playing – and I don’t – you can’t help but notice the lay of the political land she operates in.
She won the United Conservative Party leadership, and the premiership, in part on a pledge to go to war with the federal government, via the Alberta Sovereignty Act. She trades in resentment against the rest of the country, with shades of sovereignty-associationism, because it’s what a loud segment of her supporters wanted.
That’s why responding to possible U.S. tariffs by banning oil exports, unless such a response is very carefully handled, risks the release of radioactive fallout hazardous to national unity.
In the sad eventuality that the U.S. hits Canada with tariffs, and Canada hits back with oil-export controls, Mr. Trump might see advantage in offering Albertans a way out: become the 51st state! (Or maybe a mere territory, like Puerto Rico.) Exit Canada, escape the tariffs and say goodbye to arguing with the rest of Confederation about building pipelines to the Atlantic or Pacific.
It’s worth noting that Ms. Smith was at Mar-a-Lago with businessman Kevin O’Leary, who’s on Fox News pitching himself as spokesman for Canada – and a future for Canada that sounds like a 51st state.
And then there’s the Angus Reid poll released this week, a non-randomized online survey of 1,653 Canadians, which found that, though only one in 11 people in the rest of Canada want to join the U.S., 18 per cent of Albertans surveyed (and 15 per cent in Saskatchewan) want to hoist the Stars and Stripes.
Mr. Trump’s tariff threat is grave, but survivable. A recession is bad but temporary. A national unity crisis is existential.