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Oilpatch industry associations band together to fight U.S. tariffs

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Ottawa had previously indicated that it would consider imposing taxes on exports of oil, potash and uranium

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Canada’s disorganized response to Donald Trump’s threat of tariffs, coupled with concerns within the oil bloc that Ottawa might target energy exports in retaliation, has prompted five of the country’s largest energy-focused industry associations to band together in the face of a potential trade war. With the United States.

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The Canadian Association of Petroleum Producers (CAPP), the Pathways Alliance, oilfield industry association Enserva, the Canadian Explorers and Producers Association and the Canadian Energy Contractors Association announced Monday plans to coordinate a joint working group to respond to Trump’s threat to cut oil production by 25%. Cent tariff on all Canadian goods.

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“Canada is not where it should be in its preparations for major trade negotiations with someone like President Trump,” CAPP President Lisa Payton said. “Normally at this time, there would be official industry tables feeding into Team Canada’s thinking and positioning, and since that hasn’t happened yet… we’ve set up our own table.”

Part of the fear gripping Canada’s oil and gas sector, which accounts for about a quarter of Canada’s total exports, is that energy exports could be used as a weapon if a trade war breaks out between the two countries.

Minister of Foreign Affairs “Everything is on the table,” Melanie Jolie said on Sunday when asked during an interview on Sunday CTV’s Question Period program On whether her government is prepared to cut off energy supplies to the United States

Ottawa has previously indicated it would consider imposing export taxes on oil, potash and uranium if the Trump administration follows through on its threat to implement sweeping tariffs on Canadian goods.

“A countermeasure like this would simply mimic and amplify the negative effects of the U.S. import tax. In other words: it’s a double tariff,” Payton said.

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She said imposing a tariff or export tax on Canadian crude (or both) could weaken Canadian energy prices, leading to lower investment and production, while increasing unemployment and costs to consumers.

“We are in the position we are in because we remain locked into one agent who now has the motivation and desire to take advantage of that situation against Canada,” Payton said.

“Canada needs to wake up. We need to diversify our global customer base, not just for energy, but for all Canadian projects. We must build pipelines, we must accelerate LNG export facilities, we must think about ports or anything that gives us access.” Direct to global markets without having to pass through the United States.

The working group, which represents more than three-quarters of Canadian oil and gas production and hundreds of companies, said it is offering its expertise to federal and provincial policymakers to come up with strategies to avoid or mitigate the risks of U.S. tariffs.

She said she also plans to engage with her counterparts in the US industry and other influential actors in the US

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The group brings together different sectors of the oil and gas sector that sometimes disagree on key areas, including net zero policies, but the industry is largely aligned over the threat of tariffs.

Canada’s main oil sands industry group, Pathways Alliance, pointed to the long-standing trade relationship between the two countries and Canada’s importance as a supplier, supplying the United States with more than half of its oil imports in 2023.

“Canada’s oil sands are a cornerstone of North America’s energy security, and tariffs will only hurt ordinary people on both sides of the border,” Kendall Dilling, president of Pathways, said in a statement.

Many U.S. oil refineries, especially in the Midwest, are equipped to process Canadian heavy crude and have few alternative sources of supply. Experts say a sudden rise in the cost of Canadian oil would hurt refining margins and lead to higher prices for gasoline, diesel and jet fuel in the United States.

Weekly U.S. imports of Canadian crude oil reached an all-time high in the first week of January Data From the US Energy Information Administration.

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The deep integration of North American energy systems through cross-border infrastructure and trading arrangements had previously led some experts and market watchers to speculate that Canadian oil and gas could be exempt from Trump’s tariffs.

But the Canadian oil patch appears ready to heed Alberta Premier Danielle Smith’s warning on Monday — following her informal meetings with Trump at his Mar-a-Lago residence over the weekend — that Canada “needs to be prepared” that tariffs are coming.

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“It appears that this situation has not resolved itself, despite some good efforts by some governments,” said CPAC President Tristan Goodman, who credited Smith with engaging directly with the incoming US president.

“But it will come on Inauguration Day, and since there is no solution, we thought it was important to move quickly.”

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