Canada has the type of oil that the U.S. is looking for. However, when it comes to investing in the necessary infrastructure, Canada is starting to seem as risky and politically unstable as Venezuela.
Dan McTeague pointed out that this situation reflects a flawed ideology regarding Canada’s energy resources, which seems to push for keeping them untapped.
Mr. Carney might discuss China’s interest in renewable energy sources like wind and solar or question if China is seeking Canadian oil due to the availability of pipelines.
The hesitancy to build pipelines within Canada is diminishing its market standing in the U.S. at a time when alternative sources, like Venezuelan crude, are coming back into play.
Oil, oil everywhere
This issue is particularly apparent in Alberta, where most of Canada’s oil is produced. Lengthy delays in pipeline projects have left this critical energy asset underutilized.
Canada produces a heavy crude oil similar to Venezuela’s, which is excellent for diesel fuel production. Most U.S. refineries are set up to process this oil, making it crucial for transportation, agriculture, mining, manufacturing, and national defense.
For years, Alberta has aimed to construct a pipeline to the West Coast. This would not only secure a stable long-term market in the U.S. but also offer Canada the option to reach other buyers if American demand falters or politics interfere.
Yet, even with the recent agreement signed by Liberal Prime Minister Mark Carney—who has largely supported green energy and been against pipelines—the project remains in limbo. Alberta Premier Daniel Smith has made it clear she expects construction to start by fall 2026.
Carbon crunch
In truth, the memorandum of understanding hasn’t changed much. It does not simplify federal reviews, acknowledges Indigenous issues, or commit public funds, and it creates further complications with rising carbon taxes and decarbonization rules that discourage private investment.
While the U.S. remains Canada’s biggest customer, access to West Coast routes is still vital as it provides producers with better pricing, choices, and safeguards against sudden policy shifts in Washington, similar to the situation Venezuela faces as it reopens its markets.
The pressing question is who could build this pipeline and whether it can be finished before the U.S. opts for cheaper Venezuelan oil.
Venezuela in the north?
Donald Trump has suggested the possibility of asking oil companies for $100 billion to build infrastructure in Venezuela to facilitate oil transport to the North. However, the CEO of Exxon dismissed this notion, citing Venezuela’s turbulent history with asset seizures. Still, Trump might push for public funding for this initiative.
McTeague, a former Liberal MP, believes Canada is equally unappealing to investors and blames policy decisions rather than geological factors for this situation.
He asserts that Canada is “rich in resources” yet adopts a narrative that leads producers to keep those resources untapped, which is unusual for a resource-rich nation.
This approach chases away private investments, leaving the government to shoulder the responsibility of pipeline development. With Carney’s upcoming trip to China, the stakes are even higher as Canada seeks leverage rather than reducing its ties with the U.S.
Windmill tilt
Upon arriving in Beijing, McTeague suggests Carney faces a choice: he can promote decarbonization and the purchase of renewable energy resources, or he can inquire if China is interested in Canadian oil because of the existing pipelines.
The crucial point, according to McTeague, is that Canada shouldn’t aim to replace the U.S. as its primary oil buyer, but it must demonstrate that it has credible alternatives to be taken seriously by either side.
He also criticized the MOU for planning significant carbon tax increases in the coming years, arguing that it contradicts economic realities. Decarbonization mandates won’t sway investors when considering pipeline projects.
Time is of the essence, he warns. With federal debt on the rise, Canada’s fiscal reputation is at risk. Without a solidified pipeline, the nation might jeopardize its economic future.
On top of the barrel
McTeague challenges claims that the United States isn’t dependent on energy imports, noting that while it produces around 12 to 13 million barrels daily, it consumes about 21 million.
He underlines that Canada’s significance lies not just in the volume of oil, but also in the type it produces. U.S. shale oil is predominantly suited for gasoline and not diesel, which is essential for various sectors, including transportation and defense. This is the very fuel Venezuela is currently able to provide, possibly at a lower cost compared to Canadian oil burdened by taxes and regulations.
Canada finds itself in a precarious situation. Beyond the competition from Venezuelan oil for U.S. demand, the actual challenges of constructing a major pipeline in British Columbia against the clock add more pressure.
From an energy standpoint, Canada is making the unfathomable decision to allow itself to be overlooked.
