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By Dean Brown.
Good day,
Here’s one of those Canadian questions where the obvious answer sounds almost too obvious.
Canada produces an enormous amount of oil. So why don’t we refine all of it here, sell the gasoline and diesel ourselves, and keep more of the money?
Especially when Canada somehow still imports crude oil and refined fuel.
I’ve heard variations of this argument for years. And after looking into the numbers, there is a legitimate question underneath it.
But the idea that Canada simply ships raw oil to the Americans, lets them make all the money and then buys it back at a markup isn’t really how the system works.
Canada produces way more oil than we could use ourselves
Canada produced a record 5.35 million barrels of crude and equivalent products per day in 2025.
Meanwhile, Canada’s 16 crude refineries can process about 1.9 million barrels per day, and they actually processed around 1.6 million last year, meaning existing facilities were running at roughly 90% utilization.
So this isn’t a case of Canada having empty refineries sitting around.
If we wanted to process another two or three million barrels domestically, we would need to build enormous amounts of new refining capacity.
And even then, Canada doesn’t consume enough gasoline, diesel and jet fuel to use everything those facilities would produce.
We’d still be exporting energy. It would just be finished products instead of crude.
We already refine more oil than people think
Canadian refineries produced a record 117.1 million cubic metres of finished petroleum products in 2025.
Gasoline and distillates like diesel made up almost three quarters of that.
Canada also exports significant amounts of refined fuel.
So we aren’t simply pulling oil out of Alberta and sending all of it south.
Canada simultaneously:
produces crude, refines crude, exports crude, imports crude, exports fuel and imports certain fuels.
It sounds unnecessarily complicated.
Until you look at the map.
Why does Canada import oil when we produce so much?
The answer has much more to do with geography than an oil shortage.
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Oil doesn’t teleport
Most Canadian crude comes from western Canada.
But Canada’s largest refinery is in Saint John, New Brunswick, thousands of kilometres away and without a crude pipeline directly connecting it to Alberta.
So from the refinery’s perspective, the question isn’t:
“Does Canada have oil?”
It’s:
“What oil can I physically get here at the right price and in the grade I need?”
Sometimes bringing a foreign barrel into Saint John by tanker makes more commercial sense than transporting an Alberta barrel across the country.
That helps explain why Canada still imported about 506,000 barrels of crude per day in 2025 despite producing more than ten times that amount.
The interesting part is that imports have already fallen considerably from where they were 15 years ago.Canada does NOT face a blanket 50% tariff on everything we sell to America.
Then there’s the type of oil Canada produces
Oil isn’t one interchangeable liquid.
A large share of Canada’s growing production comes from heavy oil-sands crude, which requires more sophisticated equipment to process than lighter crude.
Raw bitumen is so thick that producers normally have to either upgrade it into synthetic crude or mix it with lighter hydrocarbons before moving it through pipelines.
And this is where American refineries built themselves an advantage.
Many large Midwest and Gulf Coast facilities already spent billions installing equipment designed for heavy crude from places like Venezuela and Mexico.
Canadian oil eventually became a natural fit for the same refineries.
So imagine you’re an Alberta producer.
An American refinery already has billions of dollars worth of equipment designed to process your barrel.
Do you spend billions building another refinery in Canada?
Or sell the crude to the facility that already exists?
Sometimes the second option simply makes more economic sense.
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But America still makes money refining our oil, right?
Absolutely.
That’s why refiners buy it.
They turn Canadian crude into gasoline, diesel, jet fuel and petrochemicals and earn a refining margin.
But that doesn’t mean Canada automatically gave away money that could have been ours.
The refinery owner also spent billions building and operating the facility.
Canada makes money producing the crude.
The refinery makes money processing it.
The retailer makes money selling the finished product.
Canada should absolutely capture more of that value when the investment makes sense.
But simply turning every Canadian barrel into gasoline before exporting it doesn’t automatically make us richer.
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The bigger weakness may be who buys our oil
This is where the issue gets much more important to me.
Canada exported about 4.3 million barrels of crude per day in 2025, and roughly 90% went to the United States.
That dependence matters a lot more after everything we’ve seen in the Canada-U.S. relationship.
It’s also why Trans Mountain being almost full already matters.
The expansion gave Alberta much greater access to the Pacific and allowed producers to sell more crude into Asia instead of automatically sending almost everything south.
And it’s why the debate over another west coast pipeline is going to keep growing.
Another refinery gives Canada another place to process the barrel.
Another export route gives Canada another bidder for the barrel.
That difference matters.
And Venezuela makes this even more relevant
That connects directly to this question.
Venezuelan heavy crude can compete for some of the same U.S. refining capacity that processes Alberta oil.
Venezuela isn’t replacing Canada tomorrow. Rebuilding its oil sector will take years.
But if another large heavy-oil supplier eventually comes back into the market, Canada benefits from having more customers of its own.
That’s why I don’t think the answer is:
“Refine everything here.”
It’s:
“Make sure Canada has enough options.”
One thing before I go…
I do think there’s a stronger argument today for Canada processing more of its own resources.
The U.S. supplied about 76% of Canada’s imported crude last year and nearly 80% of our imported refined petroleum products.
That deserves scrutiny.
But I don’t think Canada’s biggest energy problem is simply Americans refining some of our oil.
It’s that we haven’t always had enough options.
Enough customers. Enough pipelines. Enough connections between western oil and eastern Canada. Enough domestic processing where the economics actually work.
The goal shouldn’t be doing everything inside Canada just because we can.
It should be making sure no single country can dictate what our resources are worth or whether Canadians can access them.
P.S.
If Canada had $15 billion to strengthen our energy security, where would you put it?
Another refinery, another export pipeline, or better east-west infrastructure?
Hit reply and tell me why.
Until Tomorrow,
Dean