U.S. Net Energy Imports from Canada Far Exceed Exports

The value of U.S. energy imports from Canada consistently exceeds the value of U.S. energy exports to its northern neighbor by a large margin, writes the Energy Information Administration (EIA). Canada is the largest energy trading partner of the U.S., based on the combined value of energy exports and imports. And although the value of bilateral energy trade has varied over the past decade, driven primarily by changes in the prices of oil and natural gas, the overall structure of energy trade flows has changed relatively little. Increasing energy commodity prices in 2017 led to growth in the value of both exports to, and imports from, Canada.

Based on annual data from the U.S. Census Bureau, energy accounted for $18 billion, or about 6%, of the value of all U.S. exports to Canada. Energy accounted for $73 billion, or about 24%, of the value of all U.S. imports from Canada in 2017, up from 19% in 2016. Canada is the main source of U.S. energy imports and the second-largest destination for U.S. energy exports behind Mexico.

Crude oil accounts for most U.S. energy imports from Canada, averaging 3.4 MMbbld in 2017. Canada is the largest source of U.S. crude oil imports, providing 43% of imports last year. The value of U.S. oil imports depends on both volume and price. In 2017, the value of imports from Canada rose, reaching $50 billion, as a result of both an increase in oil prices and an increase in volume. Canadian crude oil imports by the U.S. is largely produced in Alberta and consists mainly of heavy grades shipped primarily to the Midwest and Gulf Coast regions.

Until the removal of restrictions on exporting U.S. crude oil in December 2015, virtually all U.S. oil exports went to Canada, which was exempted from the restrictions. Since the U.S. began exporting more crude to other countries, Canada’s share of exports has fallen, although it still remains the largest destination for U.S. exports. In 2017, for the first time, the U.S. exported more crude oil, in total, to other countries— 794,000 bbld—than it exported to Canada— 324,000 bbld. U.S. oil exports to Canada are typically light, sweet grades that are shipped to the eastern part of the country.

Bilateral petroleum products trade with Canada is relatively balanced in both volumetric and value terms, notes EIA. In 2017, Canada was the destination for 516,000 bbld of petroleum products, or 10% of all petroleum products exported from the U.S. These exports were valued at more than $9 billion last year. However, the mix of petroleum product flows between the U.S. and Canada varies by product and region. For example, the U.S. is a net importer of gasoline from Canada, with significant volumes flowing from refineries in eastern Canada to serve markets in the northeast U.S.

In contrast, little of the petroleum products exported from the U.S. to Canada are finished transportation fuels. Pentanes plus, LPG, and other oils constitute most U.S. product exports. Some of these products are used as a diluent to enable pipeline movement of heavy crude oils produced in Canada. Overall, U.S. petroleum product exports to Canada and other destinations have increased over the past decade.

Bilateral natural gas trade between Canada and the U.S. is dominated by pipeline shipments. Natural gas imports from Canada increased to 8.1 Bcfd in 2017, accounting for 97% of all U.S. natural gas imports. Total natural gas imports from Canada were valued at $7.3 billion last year. Most of Canada’s natural gas exports to the U.S. originate in western Canada and are shipped to U.S. markets in the west and Midwest.

U.S. natural gas exports to Canada, which rose to 2.5 Bcfd in 2017, mainly go from New York into the eastern provinces. Increases in pipeline capacity to carry natural gas out of the Marcellus and Utica shale formations boosted flows of U.S. natural gas into Canada, reducing pipeline imports from Canada and increasing U.S. pipeline exports to Canada.

Electricity accounts for a small but locally important share of bilateral trade. In 2017, the value of U.S. imports of electricity from Canada increased for the second straight year, reaching $2.3 billion. The U.S. imported 72 million megawatt hours of electricity from Canada last year and exported 9.9 million megawatt hours, based on data from Canada’s National Energy Board.

(SOURCE: The Weekly Propane Newsletter, July 2, 2018. IMAGE: Pete Loeser, Flags Of The World (FOTW)

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