Canadian Crude Oil is Important to the United States
In February 2025 our Current Events post dealt with potential tariffs and the impact those costs could have on the energy sector. As we move into April, tariffs are still newsworthy. In fact, the U.S. faces the possibility of more tariffs taking effect later this week.
Westlark Advisors knows that this issue is important, which is why we continue to closely watch the market and the news. Keeping our eye on developments that could affect our clients and the greater energy industry. This is why we want to look at the importance of Canadian crude oil to the United States.
2024 is Record Year for Canadian Crude Oil Production
On March 20, 2025, Statistics Canada released an article on Canadian crude oil. Canada’s oil production is based on oil sands extraction. Many of the crude oil platforms contribute their production to the transportation of synthetic crude oil. This situation explains why production has remained constant.
It is worth noting that Statistics Canada confirmed that oil sands production reached new records in 2024 thanks to process efficiency improvements and significant maintenance activities. These improvements also positively impacted bitumen and synthetic crude production with both increasing by 4.3% in 2024. Additionally, the development of infrastructure for transporting oil by pipeline (the Trans Mountain Pipeline Expansion) has significantly boosted and improved the possibilities for increasing production.
Where Does the Crude Oil Go?
All this crude production must go somewhere, and that somewhere is the Midwest section of the United States. According to the Alberta Petroleum Marketing Commission, the top five U.S. refineries for Albertan crude oil are as follows:
- Marathon Petroleum, Robinson, Illinois (100% Alberta crude)
- Exxon Mobil, Joliet, Illinois (96% Alberta crude)
- CHS Inc. Laurel, Montana (95% Alberta crude)
- Phillips 66, Billings, Montana (92% Alberta crude)
- Citgo, Lemont, Illinois (78% Alberta crude).
Furthermore, the BOE Report, in an article from February 1, 2025, stated that virtually 100% of oil imports in the Midwest region have come from Canada.
Is Canadian Production Steady?
Has there been any slowdown in Canadian oil production? The graph below charts crude oil production for Canada versus the rigs being used to produce that oil. We can see there are times when oil production has fallen. However, over the last three years whenever rigs have decreased, oil production has only really dropped once. Oil production has remained relatively steady over the last three years and that is unlikely to change.
Conclusion
Canadian crude oil production has been growing and keeps growing even if rig counts decrease. The Midwest region of the U.S. has become very dependent on Canadian crude oil as a majority of their refineries require that grade of oil.
We are unsure how tariffs may impact all of the energy sector, but one thing we can be sure of is this – a tariff on Canadian crude is likely to have a significant impact on the refineries producing gasoline and diesel for much of the central U.S.
As mentioned above, we recognize this as an important issue for the energy industry and, as such, Westlark Advisors is watching it closely. If you are interested in information that you can trust about current events like this, contact a Westlark Advisors team member today!
Current Events – April 2025
By JD Buss and Gabriel Amundarain
