By Alisaleh Shariati
June 16, 2026
Executive Summary
Energy policy has consequences that extend well beyond producers and pipelines to impact household and business costs. In North America, a key factor keeping energy affordable is the flow of Canadian natural gas into US markets. When gas moves freely across the border, households and businesses save billions of dollars. When gas trade is disrupted, those additional costs are passed on to consumers through higher heating bills, higher electricity prices, and higher costs for goods and services.
This makes an integrated Canada–US natural gas market a major competitive advantage for both countries. It lowers energy costs, strengthens electricity reliability, supports manufacturing, and helps meet rapidly growing demand from data centers and other energy intensive industries. Preserving and strengthening this integration should be a priority for policymakers on both sides of the border.
The benefits are substantial:
- American households save approximately US$2.2 billion annually on natural gas bills under continued market integration – roughly US$40 per year for the average household that uses natural gas and US$45 for households that rely on gas as their primary heating source.
- American households could face an additional US$4.2 billion in annual natural gas costs under a sustained trade disruption. This represents the largest and most direct consumer cost of weakening North American energy integration.
- American electricity consumers save approximately US$3.5 billion annually through lower residential power prices. Under stronger integration and rising demand, those savings could increase to more than US$6 billion per year.
- American manufacturers benefit from roughly US$660 million annually in lower input costs. Industries such as fertilizer production, petrochemicals, and refining are particularly sensitive to natural gas prices and depend on affordable, reliable supply.
- The rapidly growing US data center sector has billions of dollars at stake. With electricity demand on pace to reach 580 terawatt-hours by 2028, the difference between continued integration and a major disruption is roughly US$8 billion annually in electricity costs.
- Canada also benefits significantly. Natural gas exports support jobs, investment, government revenues, and economic growth across the country. In 2024, the oil and gas sector generated C$76 billion in real value-added output, equivalent to 3.3 percent of Canadian GDP.
The costs of disrupting this relationship would be significant. Regions that depend on Canadian natural gas – including the Midwest, Pacific Northwest, Northern Plains, and parts of the Northeast – would face higher energy costs and increased pressure on electricity systems. Canadian producers would receive lower prices, reducing incentives to invest in production and infrastructure. The result would weaken affordability, reduce competitiveness, and lower economic growth on both sides of the border.
These findings point to a clear policy agenda. The 2026 review of the United States–Mexico–Canada Agreement (USMCA) should be used to:
- Preserve tariff-free energy trade between Canada and the United States.
- Maintain and strengthen the agreement’s energy-related provisions.
- Improve cross-border infrastructure coordination and regulatory cooperation.
- Reduce barriers that limit the efficient movement of natural gas across North America.
The case for action is urgent. Electricity demand is rising, artificial intelligence and data center investments are accelerating, and manufacturers are seeking reliable sources of affordable energy. Integrated Canada–US natural gas markets help meet those challenges while lowering costs for households and businesses.
For Canada, the stakes are also high. Nearly all Canadian pipeline natural gas exports – 99.5 percent in 2025 – were destined for the United States. This is a foundational economic relationship that cannot be replaced in the near term through alternative markets.
The choice facing policymakers is straightforward: strengthen a North American energy partnership that saves consumers and businesses billions of dollars each year, or accept higher costs, weaker competitiveness, and reduced energy security. The 2026 USMCA review is an opportunity to reinforce the policies that keep energy affordable and reliable for millions of Canadians and Americans.
