Canada’s Missed Opportunity: Why More Refineries and Pipelines Were Essential for Energy Security

For decades, Canada has been a global leader in oil production, yet it remains heavily dependent on the United States for refining and export infrastructure. Instead of maximizing its energy independence, Canada has allowed political and regulatory roadblocks to stall vital projects, limiting economic growth and making the country reliant on foreign refining capacity. Building more domestic refineries and east-west pipeline infrastructure should have been a national priority.

Canada’s failure to develop refining and pipeline capacity has been a self-inflicted wound, limiting the country’s economic potential and increasing dependence on foreign markets. By reversing course and adopting pro-energy policies, Canada can secure its economic future and maximize the value of its vast natural resources.

The Case for More Refineries

1. Energy Independence and Security

Canada exports millions of barrels of crude oil daily to the U.S., only to import back refined fuels like gasoline, diesel, and jet fuel at a higher cost. A stronger domestic refining sector would have reduced reliance on foreign supply chains and insulated Canadians from external price shocks.

2. Economic Growth and Jobs

Refineries are major job creators, providing employment in construction, operations, and maintenance. By expanding refining capacity, Canada could have added thousands of high-paying jobs while increasing the value of its exports.

3. Strengthening Trade Position

Instead of exporting raw crude at lower prices, Canada could have exported finished petroleum products, generating higher revenues and reducing trade imbalances. With global energy demand rising, particularly in Asia and Europe, a stronger refining sector would have positioned Canada as a key player in international energy markets.

The Need for More Pipelines to the East and West

1. Market Diversification

Currently, over 98% of Canada’s crude exports go to the United States, making Canada heavily reliant on a single buyer. The cancellation of the Energy East pipeline in 2017 meant that Eastern Canada continued importing oil from foreign producers instead of using domestic resources. Similarly, restrictions on Western pipeline expansion have prevented access to the booming Asian markets.

2. Reducing Foreign Dependence

Despite being one of the world’s top oil producers, Eastern Canada still imports oil from Saudi Arabia, Venezuela, and the U.S. due to the lack of pipeline infrastructure linking Alberta’s oil sands to the region. This reliance on foreign oil is unnecessary and exposes Canada to geopolitical risks.

3. Boosting Canadian Competitiveness

By failing to build critical pipeline infrastructure, Canada has ceded energy market advantages to the United States. While American refiners process Canadian crude and profit from it, Canada lags in developing its own refining and export capacity.

Policy Barriers and the Trudeau Government’s Role

Several policy decisions have significantly hindered Canada’s energy sector:

• Bill C-69 (2019) introduced subjective criteria such as social and gender impacts into energy project approvals, creating uncertainty for investors. The Supreme Court later ruled it unconstitutional, but the damage was already done.
• Bill C-48 effectively banned oil tankers from B.C.’s northern coast, blocking access to Asian markets.
• Federal policies have disproportionately targeted the oil and gas sector with greenhouse gas (GHG) emission caps and restrictive clean fuel standards, discouraging investment.

As a result, energy investment in Canada plummeted from $76 billion in 2014 to $35 billion in 2023, while U.S. states such as Wyoming and North Dakota surged ahead in investment attractiveness.

The Path Forward: Rebuilding Canada’s Energy Strength

If Canada wants to reclaim its position as a global energy leader, it must:

1. Encourage new refinery construction to reduce dependence on U.S. refining capacity.
2. Revive east-west pipeline projects to connect Canadian crude to domestic and international markets.
3. Streamline regulatory processes to attract investment and eliminate unnecessary barriers.
4. Balance environmental goals with economic growth to ensure Canada remains competitive in global energy markets.

1. Energy Independence & Security ??

• Canada exports crude oil to the U.S., but then imports refined fuel back at higher prices.
• If Canada had more refining capacity, it could produce its own gasoline, diesel, and jet fuel instead of depending on U.S. refineries.
• The Energy East pipeline would have connected Alberta’s oil to Eastern Canada, reducing reliance on foreign imports.

2. Market Diversification ??

• With pipelines to the West Coast, Canada could sell directly to Asia, taking advantage of growing demand in China and India.
• Eastern pipelines would have allowed exports to Europe, reducing dependence on the U.S. as the primary buyer.

3. Economic Growth & Jobs ??

• Building new pipelines and refineries would have created thousands of high-paying jobs in construction, engineering, and operations.
• More refining capacity means higher-value exports rather than just shipping raw crude.

4. Lost Opportunity Due to Policy & Regulation ???

• The Trudeau government killed Energy East in 2017 with excessive regulatory demands.
• Bill C-48 banned crude oil exports from B.C.'s northern coast, limiting access to Asia.
• Bill C-69 created uncertainty for investors, stalling projects.

5. The U.S. Wins While Canada Stalls ??????????

• The U.S. refined 2.8 million barrels per day of Canadian oil in 2023 while Canada still imports gasoline and diesel from the U.S.
• The lack of pipelines and refineries has artificially constrained Canadian energy growth while benefiting American refiners.

The Bottom Line

Canada should have built more refineries and pipelines to diversify its energy exports, create jobs, and achieve energy security. Instead, political decisions and overregulation have blocked progress, leaving the country dependent on U.S. refineries and limiting economic potential.