Trump doubles down on U.S. not needing Canadian oil and gas. Canada's industry says that isn't true

The Canadian energy industry is pushing back against Donald Trump doubling down on his claim that the United States doesn't need oil and gas from Canada.

"We don't need their oil and gas. We have more than anybody," said the U.S. president during his virtual address at the World Economic Forum. 

His comments come as Ottawa promises to retaliate against U.S. trade tariffs by withholding, reducing or exporting tariffs on Canadian energy — an approach Alberta's premier disagrees with.

Rory Johnston, a Canadian energy analyst and founder of oil market research company Commodity Context, said Trump's solution — for the U.S. to "drill, baby, drill" — is unrealistic.

It wouldn't be economically feasible for the U.S. to process the type of oil it produces, and it would render the expensive equipment at its refineries worthless, he said.

"We, Canada, have heavy crude oil that's well in surplus of our needs. The U.S. has refineries that are specifically built to process those types of crudes. We have pipes that lock our two countries into this trading relationship and make it extremely cheap to transport, extremely safe and efficient.

"All of that stuff — those are the reasons why the United States does need our crude. U.S. refineries do need our crude."

Johnston said it would cost the U.S. tens of billions of dollars and take a lot of time to make up for the loss of Canadian crude.

Less investment in Canada?

At RBN Energy, Calgary-based senior analyst Martin King said he isn't too worried.

"I don't see any big impact to be honest with you."

He said the majority of the heavy oil exported to the U.S. stays in the Midwest and Gulf Coast, and the U.S. doesn't have a lot of substitutes for that. Plus, most of the oil the U.S. produces is exported to other countries, rather than consumed in the same country.

"Plus, with Canada exporting more crude through Trans Mountain, ultimately I don't think prices will be affected much by Mr. Trump's decisions. And if prices can stay where they are right now, it's an upside for the Canadian oil industry."

King said the potential threat lies in whether Trump reduces regulations around drilling on federal lands.

"Maybe that will draw some more dollars away from Canada that normally would have come here for oil and gas projects."

But that's a trend that King said has been underway for years, and he doesn't see that changing anytime soon.

'The game has changed'

That's exactly why Mark Scholz, CEO of the Canadian Association of Energy Contractors, said he's pushing for Ottawa to reconsider policies that get in the way of the Canadian oil and gas industry diversifying its markets.

He specifically points to the emissions cap on oil and gas, the Impact Assessment Act and Bill C-59, which would require companies to provide evidence to back up their environmental claims.

"We need a complete reset because the game has changed," said Scholz.

He adds this should be a wake up call for Canada.

"We cannot be complacent. We have to look at this both in terms of, how do we preserve the trading relationship that we have with the United States? But we also have to look at, how do we ensure that Canada has a diverse marketplace to sell its products?"

Among other projects, he wants to see the Energy East pipeline — which TransCanada pulled the plug on in 2017 — be resurrected. 

The proposed project would have carried more than one million barrels of oil every day from Alberta and Saskatchewan across the country to be refined or exported from facilities in New Brunswick and Quebec.