Canada/ U.S. trade: refining sector and product movement important to both countries

Sep 07, 2017   | Categories: Economy, Fuels, Refineries
North American consumers have come to expect the world at their doorsteps, without much thought about how products get there – or even where they came from.
 
Car manufacturing is often used to describe the integrated nature of production and trade between the three countries. Automotive parts for example, can cross the Canada/U.S. border up to seven times before a finished product is delivered. You’ve probably read something like this before.
 
Yet many of us aren’t as knowledgeable about energy trade – specifically, the trade of refined petroleum products like gasoline or diesel. These products might take a back-seat to crude oil in making headlines, but they put Canadians in the driver’s seat on a daily basis.
 
Refined petroleum products trade on an open and very competitive North American market, where Canada is a net exporter to the U.S. – its biggest customer. The trade value of Canada’s petroleum product exports to the U.S. alone was 9.4 billion dollars in 2016.

The two countries have a fairly balanced trade relationship in the overall value and volume of refined product movement; the difference is in the specific type of products being traded between the two countries, which can vary by region.
 
For example, Canada’s most heavily exported refined product to the U.S. is gasoline, which accounted for 65.7 million barrels in 2016. Gasoline exports from Canada’s eastern refiners generally feed the transportation energy demands of the U.S. North East economy. On the other hand, the U.S. exports other products in greater quantity to Canada, such as jet fuel.
 
The extent to which the Canada/U.S. energy market is integrated might not be obvious to consumers on a daily basis, but supply impacts can bring the connection to the forefront. This was the case as Hurricane Harvey made landfall in the Gulf Coast, affecting large refineries and the North American fuels supply, wholesale market and pump prices.
 

Economic value

 
Aside from Canada’s trade relationship with the U.S., Canada reaps benefits from the refining industry here at home. In fact, some of the numbers might surprise you.

Canada's refining sector
The refining, distribution and sale of transportation fuels in Canada employs over 80,000 people. From the refining process to distribution and right to the point of sale at your local pump, it’s people that keep us moving. And those sales add up. In 2016, 21 billion dollars in tax revenue was collected from the sale of transportation fuels in Canada.
 
To learn more about Where some of your gas tax money goes by visiting the Canadian Fuels Association Blog – we publish weekly.
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