A decade of federal policies aimed at phasing out Canada's oil and gas sector has proven to be a costly miscalculation, with the economic toll reaching an estimated $25.6 billion in lost revenue annually, according to a recent analysis. The previous Liberal government's stance, which treated fossil fuels as a dying industry, clashes with current global energy realities and continues to hamper Canada's economic potential.
The High Price of Limited Market Access
Canada possesses immense energy wealth, ranking as the world's fourth-largest producer and exporter of crude oil and the fifth-largest natural gas producer. Despite these vast reserves, the nation's ability to profit from them is severely constrained by a lack of infrastructure. The critical shortage of pipelines means over 90% of Canadian oil exports and nearly all natural gas exports are sold to a single customer: the United States.
This reliance on one market forces Canada to sell its resources at a significant discount. The resulting revenue shortfall represents a massive drain on the national economy, money that could otherwise fund public services, reduce debt, or fuel further investment.
A Political Gaffe That Revealed a Lasting Policy
The foundational attitude of the Trudeau government was infamously revealed in January 2017 during a town hall in Peterborough, Ontario. Then-Prime Minister Justin Trudeau stated his government's intention was to "phase out" the oil sands, a comment that sparked immediate outrage in Alberta and across the energy sector.
While Trudeau later apologized and walked back the statement, asserting no country would leave 173 billion barrels of oil in the ground, the regulatory framework established during his tenure created significant barriers. A series of restrictive federal laws and regulations have left Canada struggling to build new infrastructure to get its resources to global, tidewater markets.
Glimmers of Progress Amidst Persistent Challenges
Recent developments have offered some relief, but only a fraction of what is possible. The Trudeau government-purchased Trans Mountain Expansion (TMX) pipeline began operations in May 2024, providing a new route to the Pacific coast. Furthermore, the LNG Canada plant in Kitimat, B.C., initiated under a process developed by the earlier Harper government, opened in June 2025.
However, these projects represent a trickle compared to the nation's full potential. The ongoing difficulty in securing market access remains the enduring legacy of the past decade's policy direction. Even a recent memorandum of understanding between Prime Minister Mark Carney and Alberta Premier Danielle Smith to explore a new bitumen pipeline to the northern B.C. coast has drawn criticism from some political quarters.
Global Demand Defies Earlier "Peak Oil" Predictions
The economic case for Canadian energy is strengthened by revised global forecasts. The International Energy Agency (IEA), in a November report, now projects that under current policies, global oil demand could grow to 113 million barrels per day by 2050, a 13% increase from 2024 levels. This contradicts earlier IEA models that suggested "peak oil" demand could occur as early as 2030.
The shift is attributed to a slower-than-expected global adoption of green technologies and surging energy demands, particularly from the technology sector and power-hungry Artificial Intelligence data centers. For natural gas, the IEA sees the global liquefied natural gas (LNG) market potentially doubling by 2050, driven by its role as a lower-emission transitional fuel to replace coal, especially in countries like China.
The Stakes for Canada's Economy and Workforce
The cost of inaction extends beyond lost export revenue. Canada's oil and gas sector is a cornerstone of the national economy. According to the Canadian Association of Petroleum Producers, the industry supports approximately 450,000 direct and indirect jobs, a figure that rises to 900,000 when induced jobs are included.
In 2024, the sector generated an estimated $172.4 billion in revenue and contributed over 3% to Canada's Gross Domestic Product, maintaining its position as the largest goods-producing industry in the country. With the United States under the "drill, baby drill" agenda of President Donald Trump aggressively expanding its own production, Canada's continued policy hesitation represents what analysts call economic recklessness.
The consensus among energy observers is clear: oil and natural gas will remain valuable global commodities for decades. The choice for Canada is whether to capitalize on its natural wealth responsibly or continue policies that effectively keep billions of dollars worth of resources—and economic opportunity—locked in the ground.
