Why Canadian energy isn’t saving the world

When the International Energy Agency (IEA) announced a record 400-million-barrel release from emergency oil stocks this week, it was meant to steady markets rattled by the latest Middle East shock. But for Canada, it was also a wake-up call: when allies need reliable supply, Canada should be part of the answer. But right now, we are playing a small part. 

In moments like this, allies look for reliable supply. Canada should be well placed to play a leading role given its abundance of energy resources. It has announced it will make 23.6 million barrels of oil available. It has been reported that this additional supply will be provided over the next three to six months, made possible mostly from production and logistics changes, such as delaying some oil sands maintenance and the use of more domestic crude by refiners.  

But these are stopgaps. Without more infrastructure, Canada’s ability to respond will remain limited. 

That is the real frustration. Canada is one of the world’s major energy powers, with 163 billion barrels of proved oil reserves — the fourth largest globally — and an estimated 87 trillion cubic feet of proved natural gas reserves. We are also the fifth-largest crude oil producer and fifth-largest natural gas producer in the world. 

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Despite this abundance, Canada has a problem. For decades, our system was built around one overwhelming market: the United States. In 2023, 97 per cent of our crude oil exports went south. While that may have once been efficient, today it means we have become overdependent on a trading partner we can no longer rely on. 

The world has changed. Energy is no longer just about commodities. More than ever before, it’s about security. Wars, sanctions, shipping disruptions and geopolitical rivalry have all made one thing clear: countries want supply from stable, democratic partners. That should work in Canada’s favour, but only if we can actually deliver our goods to these new markets. 

Right now, that is where the case falls apart. 

Canada is a major oil producer, yet Eastern Canadian refineries still lack pipeline access to western Canadian crude and rely on marine and rail shipments. TMX has improved access to Pacific markets, and that matters for getting more product to market and quicker. In fact, the Canada Energy Regulator says cargoes from Canada’s West Coast can reach Asia in about 10 days, versus roughly 20 days from the U.S. Gulf Coast. But TMX is already near capacity, and Atlantic Canada still imported about 286,000 barrels per day of crude in 2024. So even in a global oil shock, Canada cannot simply send large new volumes to allies overnight. 

LNG points to the same vulnerability and to a real opportunity. The IEA says a Hormuz disruption would threaten nearly one-fifth of global LNG trade, much of it from Qatar and the UAE, with no alternate route for those volumes.  

Canadian LNG from the West Coast would avoid that bottleneck. With LNG Canada now ramping up exports from Kitimat, Canada finally has a Pacific LNG outlet that can help supply Asian allies from outside the Middle East. 

That is what makes the Prime Minister’s trips to key markets such as India, Japan, Germany and China, so important. They reflect a larger shift: Canada is trying to diversify beyond the U.S. and build deeper ties with allies looking for secure, rules-based energy supply. This is not just about managing a shock. It is about whether Canada wants to become a long-term supplier of choice in a riskier world. 

That also raises another issue. Canada is a member of the IEA, but unlike some allies, it does not maintain its own public strategic petroleum reserve because, as a net exporter, it does not face the same stockholding obligation. The United States, by contrast, maintains the world’s largest government-owned Strategic Petroleum Reserve (SPR) — a 714-million-barrel strategic buffer against major supply disruptions.  

It makes you wonder whether Canada’s current approach is still the right one in this increasingly volatile world. It is at least worth asking whether Canada should have its own SPR as an energy security back-stop. Not instead of building infrastructure, but as part of a broader rethink of what energy security now demands. 

The real answer, though, is straightforward. Canada needs more trade-enabling energy infrastructure: more pipeline and export capacity to the west, where our Pacific geography gives us a natural advantage into Asia for both oil and LNG; serious new options to the east, where Atlantic access can better connect us to Europe; and enabling infrastructure in the north.  

This is a key finding of the Public Policy Forum’s report, Build Big Things which says that four things have to line up to unlock investment in major energy, critical minerals and related enabling infrastructure: coordinated public financing; efficient, effective regulation that can approve projects within a two-year timeline; infrastructure built in parallel with projects, not years later; and meaningful Indigenous economic participation from the outset, including ownership. These are not abstract ideas. This is what project proponents and other stakeholders told us real projects require if they are going to reach final investment decision. 

We know the world is not going to become less volatile. Energy shocks will happen again. The question is whether Canada will keep reacting with limited reach, or finally build the infrastructure that turns resource wealth into strategic advantage. In today’s riskier world, countries want energy supply they can trust and Canada’s reputation as a responsible producer should work in its favour. 

Canada has the reserves. It has the production base. It has allies who want what we produce. What it still lacks is the infrastructure, and policy discipline and execution to act like an energy superpower.