A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., on Saturday, Oct. 29, 2016 U.S. President Donald Trump is seen on screen in Emancipation Hall as he delivers his inaugural address on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States.
While the price gap between a barrel of North American benchmark oil and a barrel of Canadian oilsands crude has long existed, some market watchers say if the tariffs proposed by U.S. president Donald Trump were applied to Canadian oil exports, that gap would widen even furtherA file photo shows a pumpjack near Cremona, Alta., left, and U.S. President Donald Trump is seen on screen in Emancipation Hall as he delivered his Jan. 20 inaugural address.
Lodging a 25 per cent tariff against Canadian energy exports would widen that price gap, or "differential," because if Trump follows through, Canadian oil producers may need to ramp down production, Masson says. Reducing production would push that differential out. Because the province's budget relies on relatively strong oil prices, St-Arnaud believes tariffs have the potential to uniquely impact the province responsible for the vast majority of Canadian oil exports.
"And that's why if it widens post-tariffs, it's basically going to hit revenues for the oil sector and also influence a lot of our fiscal revenues," he said."Oil prices are traded in U.S. dollars, so suddenly the oil we purchase will actually be more expensive," he said, adding that — depending on how tariffs are absorbed through the exchange rate and differential — what Canadians pay at the pump could rise.
Colborne believes the market has already started to price in an increase to the differential, in response to Trump's tariff musings.
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