Canadian Energy Centre
The importance of Canadian crude oil to refineries in the U.S.

From the Canadian Energy Centre
By Ven VenkatachalamOil from Canada supplies more than 23% of U.S. refinery feedstock, helping bolster North American energy security
Introduction
The refining industry¹ in the United States is one of the world’s largest, with capacity to process 18 million barrels of oil per day. Canada plays a crucial role by supplying more than one-fifth of the crude oil refined in the U.S.
The U.S.–Canada cross-border crude oil trade is essential to North American energy security. Canadian crude oil exports and the U.S. refinery industry are highly integrated. In recent years, Canada’s crude oil sector has been making a growing contribution to the operations of U.S. oil refineries.
U.S. refineries are converting Canadian crude oil, including heavy oil,² into products that North Americans use daily, such as transportation fuels (gasoline and diesel), chemicals, and plastics. Although the U.S. has increased its production of oil in recent years, U.S. refineries still rely on Canadian heavy crude oil to meet their feedstock (i.e., the raw materials and intermediate materials processed at refineries to produce finished petroleum products, otherwise known as refinery inputs) specifications.
In this CEC Fact Sheet, we examine several economic indicators that illustrate the importance of Canadian crude oil, particularly heavy crude, to U.S. refineries. This fact sheet also analyzes the refining industry’s direct and indirect economic impacts on the U.S. economy.
1. NAICS Code 324110 (Petroleum Refineries): This industry comprises
establishments primarily engaged in refining crude petroleum into refined petroleum.
2. A majority of the crude oil imported by the U.S. from Canada is heavy crude (between 15-25 API gravity). API gravity is a commonly used index for measuring the density of crude oil or refined products. Crude oil typically has an API between 15 and 45 degrees. The higher the API, the lighter the crude; the lower the API, the heavier the crude.
Imports of Canadian crude oil to refineries in the United States
The physical characteristics of crude oil determine how it is processed in refineries. Generally, heavy crude oil offers higher yields of low-value products (coke and asphalt) and lower yields of high-value products (gasoline). Heavy crude oil requires more complicated processing than lighter crude if it is to produce high-value products.
Overall, Canadian crude oil imports to U.S. refineries for processing have risen from over 1.3 million barrels per day in 2000 to just under 3.8 million barrels per day in 2022, an increase of 181 per cent (see Figure 1). The per cent of Canadian crude in U.S. refinery feedstock has steadily risen from nearly 9 per cent in 2000 to over 23 per cent by the end of 2022.

Source: U.S. Energy Information Administration (2024a, 2024b, 2024c)
The U.S. refining industry
Since the first U.S. refinery began operating in 1861, the refining industry has been one of the largest manufacturing sectors in the United States. There are currently 129 petroleum refineries across the five U.S. PADDS³ (125 operating refineries and five refineries that are idle but not permanently shut down) (see Table 1).
3. The United States is divided into five Petroleum Administration for Defense Districts (PADDs) for the allocation of fuels derived from petroleum products, including gasoline and diesel fuel. The geographic breakdown of PADDs enables U.S. policymakers to better analyze petroleum supplies in the country

Source: U.S. Energy Information Administration (2023)
Total refining capacity in the United States has risen from 16.2 million barrels of crude processed in 2000 to nearly 17.8 million barrels per day in 2022, an increase of over 8 per cent (see Figure 2). The refining utilization⁴ has also recovered, growing from 79 per cent during COVID-19 to a high of 91 per cent in 2022.

Source: U.S. Energy Information Administration (2024b)
The impact of the U.S. refining industry on the American economy
The estimated direct and indirect economic impacts of the U.S. refining industry in 2024 include 1.6 million direct and indirect jobs, $206 billion in labour income, $577 billion in direct and indirect value-added, and $1.6 trillion in what is known as “outputs,” i.e., the value of goods and services produced by the industry (see Table 2).⁵
4. Capacity measures how much crude oil refineries are able to process. Utilization measures how much is actually being processed (as a percentage of maximum capacity). 5. These projected amounts are in nominal U.S. dollars

Source: Author’s calculations using the IMPLAN modelling system. Details may not add up to totals due to rounding
Projected spending by the U.S. refining industry, 2024-2030
Figure 3 illustrates the industry’s projected annual spending between 2024 and 2030. Industry spending is expected to be US$58 billion in 2024, rising to US$62 billion by 2030. This includes operating expenditures (OPEX) and capital expenditures (CAPEX). Cumulatively, between 2024 and 2030, the industry is projected to spend over US$428 billion.⁶
6. These projected amounts are in nominal U.S. dollars and are calculated using the Rystad Energy UCube.

Source: Derived from Rystad Energy (2024), Service Market Solution
Conclusion
American refineries are critical to the country’s strategic interest. U.S. refineries are projected to spend more than $428 billion in the next seven years on operating and capital expenditures. The industries support millions of jobs. Canadian crude is an important part of the equation. It supplies more than 23 per cent of U.S. refinery feedstock.
Not only are Canadian crude oil supplies critical for the U.S. refining industry, but they are key to North American energy security. Limiting access to Canadian crude oil for U.S. refineries would require increased U.S. imports from less-free countries, which in turn would risk North American energy security.
References
Rystad Energy (2024), Service Market Solution <http://tinyurl.com/28fmv6a6>; U.S. Energy Information Administration (Undated), Oil and Petroleum Products Explained: Refining Crude Oil <http://tinyurl.com/3b2uwrxh>; U.S. Energy Information Administration (2023), Refinery Capacity Report <http://tinyurl.com/2s4ybz9z>; U.S. Energy Information Administration (2024a), Petroleum and Other Liquids: PADD District Imports by Country of Origin <http://tinyurl.com/58mzvtts>; U.S. Energy Information Administration (2024b), Petroleum and Other Liquids: Refinery Utilization and Capacity <http://tinyurl.com/3wx957k4>; U.S. Energy Information Administration (2024c), Petroleum and Other Liquids: U.S. Imports by Country of Origin <http://tinyurl.com/bdcsbwhn>; U.S. Environmental Protection Agency (Undated), Appendix A — Overview of Petroleum Refining, Proposed Clean Fuels Refinery DEIS <http://tinyurl.com/dveyzc8k>.
Alberta
Alberta’s massive oil and gas reserves keep growing – here’s why

From the Canadian Energy Centre
Q&A with Mike Verney, executive vice-president, McDaniel & Associates
New analysis commissioned by the Alberta Energy Regulator has increased the province’s natural gas reserves by 440 per cent, bumping Canada into the global top 10.
Alberta’s oil reserves – already fourth in the world – also increased by seven billion barrels.
The report was conducted by Calgary-based consultancy McDaniel & Associates. Executive vice-president Mike Verney explains what it means.
CEC: What are “reserves” and why do they matter?
Verney: Reserves are commercial quantities of oil and gas to be recovered in the future. They are key indicators of future production potential.
For companies, that’s a way of representing the future value of their operations. And for countries, it’s important to showcase the runway they have in terms of the future of their oil and gas.
Some countries that have exploited a lot of their resource in the past have low reserves remaining. Canada is in a position where we still have a lot of meat on the bone in terms of those remaining quantities.
CEC: How long has it been since Alberta’s oil and gas reserves were comprehensively assessed?
Verney: Our understanding is the last fully comprehensive review was over a decade ago.
CEC: Does improvement in technology and innovation increase reserves?
Verney: Technological advancements and innovation play a crucial role in increasing reserves. New technologies such as advanced drilling techniques (e.g., hydraulic fracturing, horizontal drilling), enhanced seismic imaging and improved extraction methods enable companies to discover and access previously inaccessible reserves.
As these reserves get developed, the evolution of technology helps companies develop them better and better every year.
CEC: Why have Alberta’s natural gas reserves increased?
Verney: Most importantly, hydraulic fracturing has unlocked material volume, and that’s one of the principal reasons why the new gas estimate is so much higher than what it was in the past.
The performance of the wells that are being drilled has also gotten better since the last comprehensive study.
The Montney competes with every American tight oil and gas play, so we’re recognizing the future potential of that with the gas reserves that are being assigned.
In addition, operators continue to expand the footprint of the Alberta Deep Basin.
CEC: Why have Alberta’s oil reserves increased?
Verney: We discovered over two billion barrels of oil reserves associated with multilateral wells, which is a new technology. In a multilateral well, you drill one vertical well to get to the zone and then once you hit the zone you drill multiple legs off of that one vertical spot. It has been a very positive game-changer.
Performance in the oil sands since the last comprehensive update has also gone better than expected. We’ve got 22 thermal oil sands projects that are operating, and in general, expectations in terms of recovery are higher than they were a decade ago.
Oil sands production has grown substantially in the past decade, up 70 per cent, from two million to 3.4 million barrels per day. The growth of several projects has increased confidence in the commercial viability of developing additional lands.
CEC: What are the implications of Alberta’s reserves in terms of the province’s position as a world energy supplier?
Verney: We’re seeing LNG take off in the United States, and we’re seeing lots of demand from data centers. Our estimate is that North America will need at least 30 billion cubic feet per day of more gas supply in the next few years, based on everything that’s been announced. That is a very material number, considering the United States’ total natural gas production is a little over 100 billion cubic feet per day.
In terms of oil, since the shale revolution in 2008 there’s been massive growth from North America, and the rest of the world hasn’t grown oil production. We’re now seeing that the tight plays in the U.S. aren’t infinite and are showing signs of plateauing.
Specifically, when we look at the United States’ largest oil play, the Permian, it has essentially been flat at 5.5 million barrels per day since December 2023. Flat production from the Permian is contrary to the previous decade, where we saw tight oil production grow by half a million barrels per day per year.
Oil demand has gone up by about a million barrels a day per year for the past several decades, and at this point we do expect that to continue, at the very least in the near term.
Given the growing demand for oil and the stagnation in supply growth since the shale revolution, it’s expected that Alberta’s oil sands reserves will become increasingly critical. As global oil demand continues to rise, and with limited growth in production from other sources, oil sands reserves will be relied upon more heavily.
Canadian Energy Centre
Experts urge caution with Canadian energy in response to Trump tariffs

From The Canadian Energy Centre
By Will Gibson
‘We want Americans to stand up for our supply’
A lawyer by training, Gary Mar is also a keen student of history. And he recommends Canadians look at what happened when past U.S. administrations imposed tariffs on imports before jumping to add costs to Canadian energy.
“President Richard Nixon imposed a 10 per cent tariff in 1971 and withdrew it after a few months because it caused so much pain for American consumers,” says Mar, CEO of the Canada West Foundation, who served as Alberta’s trade representative in Washington from 2007 to 2011.
“Canadians and their governments need to be patient. Any tariffs on energy will be passed on to consumers in the United States. We shouldn’t let the president off the hook for raising the price to American drivers by putting more duties on energy we export,” he says.
“We want Americans to stand up for our supply, not displace the anger with President Trump for raising prices with anger towards Canadians.”
A major U.S. supplier
The U.S. imports more than four million barrels of oil per day from Canada, or about one out of every five barrels the country consumes. Most Canadian imports are destined for refineries in the U.S. Midwest including Illinois, Indiana, Michigan and Ohio.
About 99 per cent of natural gas imports into the United States also come from Canada. Natural gas imports flow primarily to Idaho, North Dakota, Minnesota and Montana, according to the U.S. Energy Information Administration.
Trump tariffs
Nixon put tariffs in place in an attempt to weaken the U.S. dollar against foreign currencies and strengthen U.S. exports.
Mar, who served as cabinet minister in the Klein and Stelmach governments from 1993 to 2007, sees Trump’s tariffs as aimed to repatriate manufacturing and jobs to America.
“President Trump made this explicitly clear…if you want to sell manufactured goods in the United States, you need to move your factories here,” says Mar.
“But Canadian oil and natural gas are key inputs that help U.S. manufacturing. We ship the products or partially refined products that support manufacturing of finished products in the United States. Tariffs will raise those costs for U.S. manufacturers and ultimately American consumers.”
A divisive rerun of the National Energy Program?
Mar’s former cabinet colleague Ted Morton agrees Canada needs to exercise patience and caution in any response to U.S. tariffs.
Morton, who served as an Alberta cabinet minister from 2006 to 2012, strongly disagrees with the idea of placing countervailing tariffs on energy exports to the United States. Morton casts it as a divisive rerun of then Prime Minister Pierre Trudeau’s controversial National Energy Program in the early 1980s.
Energy export tariffs “would be an attempt to revive Liberal Party support from disillusioned voters in Ontario and Quebec,” he says.
“The biggest loser in Trump’s new tariff war will be Ontario due to the integration of the auto sector between the U.S. and Canada. It’s simple political arithmetic. Ottawa could collect $4 or $5 billion by taxing energy exports in western Canada and send that money to prop up struggling industries in Ontario and Quebec,” Morton says.
“Ontario and Quebec combined have a total of 199 MPs, more than enough to form a majority government. It’s the ‘screw the West and take the rest’ strategy. It’s how the Liberals won the 1980 federal election, and they could try it again.”
Legal and constitutional precedents
And while imposing export tariffs on Canadian energy could be politically popular in central Canada, Morton suggests the action would not withstand a legal challenge thanks to legal and constitutional precedents set by former Alberta Premier Peter Lougheed.
“Peter Lougheed left future Alberta premiers with some very effective legal weapons. His government successfully challenged the constitutionality of Trudeau’s export tax on natural gas. He then teamed up with the other western premiers to negotiate a new constitutional amendment that affirms provincial jurisdiction over the development and conservation of natural resources,” Morton says.
“Premier Danielle Smith should win any constitutional challenge if the federal government tries to impose an export tariff on oil or natural gas.”
Morton, like Mar, also counselled patience in responding to tariffs because “Trump’s tariffs on Canadian energy will punish American consumers more than Canadians.”
The national interest
David Yager, who has studied and analyzed energy policy for more than 40 years, agrees tariffs on energy have the potential to drive a wedge between Alberta and the rest of the country in the same way the National Energy Program did.
“The dynamic definition of national interest is what I struggle with. Going back several decades, it was in the national interest to get oil and gas across Canada so there was a drive to build pipelines east and west,” says Yager, a consultant who also serves as a special advisor to Premier Smith.
“Today, the national interest has flipped again, and energy exports are now a source of revenue to save the ‘real’ Canada, which is central Canada. It’s the same kind of logic that has seen the emissions cap on oil and gas as well as the carbon tax.”
If Canada wants to retaliate, Yager recommends putting a duty on the 1.7 billion cubic feet of natural gas imported by Ontario and Quebec from the northeastern United States.
“That would be the appropriate tit for tat response,” Yager says.
“You could build a nice pool of capital and clobber U.S. producers without driving a wedge between Alberta and the rest of the country.”
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