Trump's 'Drill, baby, drill' promise is easier said than done
Falice Chin | CBC News | Posted: February 6, 2025 1:45 AM | Last Updated: 21 hours ago
A closer look at U.S. president's ambitious claims reveals host of complex realities
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Donald Trump says the United States doesn't need Canadian oil and gas. Not only that, the president insists his country can be totally energy independent because, in his words, "We have more than anybody."
He's so sure of it, he declared a national energy emergency on Day 1 in the White House, outlining a plan to supercharge domestic production with deregulation, executive orders and infrastructure expansion.
Drill, baby, drill. Or so the slogan goes.
But energy experts say it's not that simple. Having plenty of resources isn't enough — the U.S. still has to contend with market forces, refinery constraints, geographical challenges and hesitant investors. Plus, communities often push back against new energy projects.
Then there's OPEC+, the alliance of oil-producing nations that has the power to wage a price war against the U.S. so intense and tactical, it would make Trump's current tariff tiff with Canada look like a sneeze.
U.S. produces plenty, but not the right kind
The U.S. is already the world's top oil producer, pumping out 13 million barrels a day — more than Saudi Arabia or Russia. By comparison, Canada produces less than half that.
Yet the U.S. still relies heavily on Canadian crude.
"There is some logic in terms of — they do have enough oil. It's maybe not the right oil," said Jackie Forrest, executive director of the Calgary-based ARC Energy Research Institute.
U.S. refineries, particularly in the Midwest and Gulf Coast, were designed to process heavier crude — like the kind that comes from Alberta oilsands.
WATCH | Tariff talk with Jackie Forrest:
Grant Sprague, a former Alberta deputy minister for energy, says this arrangement has been mutually beneficial for both countries — complementing rather than hindering America's ambitions to be No. 1 in energy.
"I don't know what problem they're fixing there," he said. "The margins are really quite good.
"Their ability to export their light oil to wherever they would like to see it on the world stage puts them in a catbird seat of being able to have their cake and eat it too," said Sprague.
Retooling refineries to handle only U.S. light crude is possible, but it would take years and cost billions, Forrest told CBC's West of Centre.
"But hey, in the long term, especially if our oil is $15 a barrel more, which was what a 25 per cent tariff would be, I think there would be some motivation to adjust those refineries, but that would take some time," she said.
And then there's infrastructure. Pipelines built to bring Canadian crude south can't reverse themselves or expand overnight.
Can deregulation spur more drilling?
Trump's plan to gut regulations and dangle tax incentives is meant to entice U.S. producers into drilling their way to energy dominance. But that plan faces three major hurdles.
The first has to do with global demand.
Trump's push for energy independence assumes the U.S. can simply drill more to replace foreign oil, including Canadian imports. But the type of light, "sweet" oil the U.S. produces from shale is a barrier.
"The light sweet barrel is not what the world really wants. The barrel the world wants … is the OPEC medium-sour barrels," said Mukesh Sahdev with Rystad Energy, a global advisory firm based in Oslo, Norway.
The medium-grade crude from the Arabian peninsula is historically more abundant, cheaper, more aligned with refiners, and is more versatile in that it can yield a balanced slate of products like gasoline, diesel, jet fuel, heating oil and residual fuels.
Ironically enough, Sahdev says mixing American light with Canadian heavy crude makes "quite a good cocktail to replace and displace Middle Eastern barrels."
He goes as far as to quip that this is, in fact, why he thinks Trump wants to call Canada the 51st state.
"He knows Canada is important to the U.S. — that's why," Sahdev half-joked. "Why make it the 51st state if you don't need it? You badly need it!"
OPEC+ could wage sophisticated war against U.S.
The second main challenge is OPEC+.
The oil cartel, which includes Saudi Arabia and Russia, has a history of manipulating supply to control prices. If the U.S. floods the market with oil, expect OPEC+ to respond by cutting production to keep prices stable.
But the opposite approach is also possible.
Trump has said he wants global oil output to rise and prices to drop, but it's unclear how he'd handle another catastrophic price collapse.
"Good luck with that," Sprague said.
In 2014, Saudi Arabia ramped up production, sending oil prices crashing from $100 US a barrel to under $30. A wave of American shale drillers went bankrupt.
In 2020, when Russia and Saudi Arabia "broke up" over whether to cut production to prop up prices during the start of the COVID pandemic, the Arab kingdom ended up flooding the market with discounted oil, targeting Russia's key customer base in Europe. Another wave of U.S. companies filed for bankruptcy.
The OPEC+ alliance today is much more sophisticated, said Sahdev. An oil war waged in 2025 would incur fewer mutually destructive wounds. Besides, the U.S. industry has also grown more resilient.
Instead, Rystad Energy predicts OPEC+ could ramp up exports of refined products to out-compete older, less complex refining centres in regions like Europe and parts of the United States.
By pushing out extra diesel and other refined products into the world, they can drive down refining margins, potentially causing a drop in demand for American oil without crashing crude prices for everyone.
"They are not playing the same old price war game," said Sahdev. "We believe it's going to be more of a refinery margin war game."
Wall Street, not White House, dictates investment
But there's a third issue closer to home: investors aren't convinced.
"Wall Street dictates who's going to do what in terms of investment, it's not President Trump," said Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce.
"If the numbers work, they work. If they don't, that's not happening," she said on West of Centre. "And so there's a real disconnect in terms of what the economics and the markets want versus what he thinks can happen."
Forrest agrees investors aren't exactly eager to bankroll another shale boom.
"Most of these publicly traded oil companies in the U.S., their investors are saying, 'Don't grow, give me my money back,'" Forrest said, referencing shareholder dividends.
Or as Sprague puts it: "Why would I invest $1 million so I can get a one per cent return? Doesn't sound like a really good idea."
Like 'spinning plates'
The problem with "frack, baby, frack" is that the more you extract from shale, the more difficult it gets to manage and make money off all those sites.
Susan Bell from Rystad Energy likens it to "spinning plates" — easy to do when there's just a few to focus on. But the short life cycles of shale production mean producers have to find new plates to spin in order to grow.
"You picture somebody running from one plate to the next and trying to keep them all going," Bell said. "That's kind of what shale is like. At some point, you get to … where it would be really difficult to grow production without an awful lot of investment in new rigs."
Running those new rigs would require more oilfield workers. This could mean more jobs — exactly the sort of "America First" vision Trump has for the country.
But unlike Saudi Aramco, which answers to a king, U.S. energy companies answer to shareholders, who want dividends, not costly drilling projects.
How about subsidizing American producers?
Trump could try tax cuts and subsidies to push more drilling, but that could contradict his own policies.
"It's difficult if you've already got a fairly low tax regime," Sprague explained.
"And for a president who doesn't want to spend money, I don't know why he'd want to do that," Sprague said about the prospect of introducing subsidies.
Expect more drilling, but not a revolution
However he gets there, Trump's executive orders will likely boost U.S. production over the next few years, particularly in Alaska and offshore drilling sites in the Gulf of Mexico.
"We know there's a lot of oil in ANWR (Arctic National Wildlife Refuge) and in Alaska," Forrest said. "Certainly there's a lot of … natural gas. They have like 100 years of natural gas at their current consumption."
These moves would reverse a ban issued by Joe Biden in his final days in office.
"Now, will companies believe that these executive orders are going to hold and that they can develop these resources in the time they need without risk of things changing? I don't know," Forrest added.
Trump had faced resistance in his first term. In 2019, more than a dozen coastal governors, including six Republicans, opposed his offshore drilling plan. He ended up backing down.
This time around, conservationists will fight tooth and nail to protect Alaska, and millionaires living along the Gulf Coast from Texas to Florida won't necessarily want their waterfront views spoiled by oil rigs.
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"I don't think NIMBY is a national term — it applies everywhere," Sprague said. "If you just think about the challenges that occurred during the proposed building of [the Keystone XL pipeline], what was interesting to watch was the local concerns that were being raised."
Alaska drilling more remote, more challenging
Even with community buy-in, drilling in Alaska poses huge logistical challenges.
"The challenge with northern Alaska is going to be very similar to what it would be for drilling in northern Canada," Sprague said. "The distance for transportation and the difficulty of producing in places that have worse weather than Louisiana and Texas add yet another area of complexity."
Extreme cold, massive transportation costs and the difficulty of building infrastructure all translate to higher costs — counter to what Trump wants.
Between refinery constraints, domestic challenges, OPEC's meddling and Wall Street's cold feet, a compelling argument can be made about why the U.S. still needs Canada.