Do U.S. Refineries Depend On Canadian Oil?

America’s biggest import from Canada is crude oil, with imports having doubled since the early 2000s.

Context

Alberta Premier Danielle Smith tweeted about the U.S. industry's heavy reliance on Canadian oil, particularly its refineries, in response to President Donald Trump’s announcement of a 10 percent tariff on all Canadian energy.

Analysis

Canada is the largest foreign supplier of crude oil to the United States, providing approximately 60 percent of all U.S. crude oil imports, which amounts to about 4 million barrels per day.

Conversely, the U.S. accounted for 97 percent of Canada’s crude oil exports in 2023, with Alberta contributing around 87.4 percent of the total.

Canada primarily produces heavy crude oil, which requires particular refinery equipment, specifically large cooking units. Most refineries in Canada do not have these specialized units, making it necessary to export the heavy crude oil to U.S. refineries that are equipped to process it.

When most of Canada’s oil refineries were built, there was an abundance of light crude oil, and the refineries were not adapted to process the heavy crude oil from the Alberta oil sands that began to emerge later.

As of 2018, Canada had 14 refineries, most of which were designed for domestic consumption. Despite being the seventh-largest producer of crude oil, Canada refines only about 30 percent of its own oil, and most of that is used within the country.

Canadian refineries have also not expanded since the early 2000s, while oil production has continued to increase.

One significant limitation for the utilization of domestically produced oil is the lack of pipelines transporting oil between provinces. For instance, as of 2018, Ontario imports all of its crude oil from the U.S.

America’s biggest import from Canada is crude oil, with imports having doubled since the early 2000s. Most of Canada’s crude oil, about 62 percent, goes to the Midwest U.S. Over the past decade however, more refineries along the Gulf Coast have been specifically designed to process Canadian crude oil, leading to a significant increase in imports of over 500 percent.

While the United States is energy independent, producing more than it needs, it still relies on imported crude oil because its refineries are not well-equipped to process the light shale oil produced in many parts of the country. This light oil often gets exported instead.

America's options to become independent from Canadian imports are challenging and limited. Switching their refineries to process light oil instead of heavy crude for example would be very costly.

The industry also enjoys the profits of buying cheaper heavy crude oil from Canada for refinement, and exporting the more expensive light oil. Canada is one of the few countries worldwide to have a big supply of heavy crude oil, aside from Venezuela, restricting America's options for alternative sources.

Canada and the U.S. oil industries are further tied due to the fact that Canada then imports some of its oil back from U.S. refineries, with 500,000 barrels imported in 2023.

In total, 72.4 percent of the oil imported to Canada comes from the U.S.

Ontario, Quebec, and the Atlantic provinces are the biggest importers, relying heavily on U.S. refineries as it is currently more cost-effective to import oil due to the lack of local refineries and the lack of infrastructure connecting them with refineries that exist in the rest of the country.

On February 1, 2025, U.S. President Donald Trump signed executive orders imposing new tariffs on imports from Canada, Mexico, and China. The orders included a 25 percent tariff on most Canadian imports, with a 10 percent tariff specifically applied to Canadian energy resources, including oil.

In response, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs, including 25 percent tariffs on $155 billion worth of American goods, set to take effect if and when the U.S. tariffs are implemented.

Both tariffs have currently been put on hold, though the U.S. has implemented new tariffs targeting steel and aluminum imports from Canada.