The Energy Trade with Canada is Reversing
Since the 1990s, Canada has become a major source of energy imports for the United States, dramatically reducing our dependence on OPEC oil. At the same time, we have always sent a lot of coal north of the border. Now with the development of new oil and gas resources in the United States, our imports of gas are declining. At the same time, Canada's new energy policies are reducing imports of US coal.
The two graphs show our relationship with Canada in terms of natural gas (left) and coal (right). The horizontal axes represent time and the vertical represents the quantity of imports and exports. With natural gas, imports are in red with exports as the small blue bars at the bottom. Net exchange - imports minus exports - is represented by the green line. With coal, the chart does things a little differently. Gross exports are represented by the blue line and imports from Canada as the green line at the bottom. The net figure - exports minus imports - is represented by the beige bars.
Gas imports rose throughout the 1990s from 4 billion cubic feet (bcf) in 1990 to above 10 billion cf in 2002, peaking again in 2007. Since then they have declined to slightly above 8 billion cf. Meanwhile gas exports, which were almost negligible, have steadily risen over the last decade to over 2 billion cf. The result is that the net balance has declined sharply form nearly 10 billion cf of exports in 2002 to less than 6 billion today. Most of this decline has been in the northeastern part of the US, where new gas resources are being developed. Imports in the Midwest and far west have actually risen slightly.
On coal, the traffic has always been in the other direction, with US exports to Canada peaking in 2008 at 23 million short tons. Imports, meanwhile, have remained almost perfectly steady at 2 million tons for two decades. But since 2008, exports have dropped sharply and now barely exceed 6 million short tons. This has been almost entirely the result of Canadian efforts to shift away from coal-fired electricity.
The interesting third leg is the trade in oil. Although US oil imports are declining, the trade with Canada has actually increased slightly so that Canada now provides 29 percent of our imports and has become our largest foreign supplier. The big question is whether these crude imports will be supplemented by the Keystone Pipeline, which would almost double imports from Canada. President Obama is supposed to decide on building the pipeline in the near future.