Is restricting U.S. from Canada’s oil ‘crazy’? Here’s what happened before

The escalating trade war between Canada and the U.S. has once again brought up the controversial idea of using Canadian energy exports as leverage against the Trump administration. However, experts remind us of history and caution against such actions. Over 50 years ago, Canada imposed an export tax on its oil sold to the U.S., which sparked the National Energy Program.

This policy aimed to reduce the oil industry’s reliance on American investment and secure domestic supply. While it led to the establishment of Petro-Canada and pushed for North American free trade, it also caused deep rifts in Western Canada that still persist today. Heather Exner-Pirot, a senior fellow and director at the Macdonald-Laurier Institute, warns that repeating this history would be a mistake.

She explains that doing so would be seen as Alberta being the "sacrificial lamb" to appease Ontario's grievances, and it would not benefit anyone. In 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) banned oil sales to the U.S. and any country supporting Israel during the Yom Kippur War, causing global oil prices to skyrocket.

Canada responded by imposing an export tax, which helped subsidize refiners in Eastern Canada. However, American politicians and media criticized Canada for "exploiting" the U.S.'s energy problems. The export tax was eventually lifted in 1984, and the North American Free Trade Agreement (NAFTA) was established in 1987, prohibiting any export taxes on goods traded between Canada, the U.S., and Mexico.

In 1980, the Liberal government introduced the National Energy Program to boost Canadian ownership of its oil industry and secure domestic supply. However, it faced heavy criticism in Alberta, which accused Ottawa of interfering in provincial jurisdiction. The program was dismantled just five years after its introduction, with former Prime Minister Brian Mulroney stating that it damaged the relationship between Canada and the U.S. Prime Minister Mark Carney, raised in Edmonton, has vowed to avoid actions that would further divide the country.

Exner-Pirot and energy industry experts emphasize that repeating the mistakes of the past would be self-defeating and counterproductive.