This paper analyzes a special relationship between the United States Midwest and Canada in oil and gas trade.

Increasing interest in Canadian oil supply to the Midwest is reviewed against the widening oil production-demand "gap" in the "lower 48" and studies leading to the looping via Chicago of the Interprovincial-Lakehead pipe line. Recent export pipe line. Recent export levels are discussed in relation to United States-Canadian understandings and the import control system of March, 1970.

Economic, supply and political factors affecting future growth are reviewed. These include relative crude oil prices, exchange rates and Alaskan oil, the present Canadian reserves and deliverability situation and the potential of "frontier areas" and of the tar sands; Government policies in the two countries are, however, regarded as of overriding importance.

Concerning gas, while Canadian potential is great, near-term potential is great, near-term prospects are bleak due to lack of prospects are bleak due to lack of a "surplus". Accelerated reserves development - partly contingent on access to oil export markets - could, however, make possible increasing Canadian gas exports.


Oil is the largest commodity in international trade and natural gas is becoming increasingly important in this respect. The major oil concerns are the original "multinational companies". There is growing international interdependence between markets on the one hand and supply sources on the other.

It is against this broad background that I would like to isolate the Midwest area of the United States and examine what I think is a special relationship between it and Canada.

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