Canada is a Top Oil Producer — Your Gas Price Doesn't Know That

Canadians are right to be perplexed when a war half a world away sends the price at the pump climbing — especially in a country that's one of the world's largest oil producers. The reason is just not the one most people assume.

More than 95% of Canada's crude oil production is exported to the United States. So, when the federal government talks about "nation-building" energy projects to export more oil and gas to global markets, the goal isn't the energy security of Canadians — it's the ability of the oil and gas sector to participate in global energy markets. And it's that global market that influences the price Canadians pay at the pump or the meter. In the same way, federal investments to expand liquified national gas exports are expected to raise prices at home.

Exporting the barrel, importing the price

Despite Canada producing enormous volumes of oil, it doesn't insulate us from a price shock caused by event half way around the world because the oil itself was never destined to stay here. When the U.S. and Israel launched attacks on Iran, Iran responded by closing the Strait of Hormuz to oil tankers. Global oil supply was disrupted and Canada, as a producer selling into that same global market, began to benefit from higher prices even as Canadians pay more to fill up.

Every $10 increase in the price of a barrel of oil translates into roughly $2 billion in additional federal revenue. In 2026, Alberta oil and gas royalties are budgeted to contribute 18% of Alberta’s total revenue — at tensions continue in the Middle East that will likely grow. The higher the global price for a barrel of oil, the more the royalties flow. The same conflict that raises the price at the pump increases revenue in Ottawa and Edmonton — "energy security" gets used to describe two very different things in Canada.

Conflict has driven real reform before, not just prices

The 1970s oil crises — when producing countries restricted exports and prices soared — triggered shortages, rationing, and recession across the West, and pushed several nations to invest seriously in energy efficiency and renewables to insulate themselves from global energy politics. Iceland's postwar shift to geothermal traces directly to that period.

Recently, Russia’s 2022 invasion of Ukraine renewed energy security concerns in Europe and led to a restructuring of Europe’s energy policy to accelerate their shift away from Russian fossil gas to renewable energy.

Canada doubled down instead, and is doing it again

Canada took a different path 50 years ago. Rather than using that same shock to reduce fossil fuel dependence, the country doubled down on investment in the oil sands — and looks poised to make a similar bet again, fifty years later. Over 70% of the major shareholders of Canadian oil sands companies are foreign entities, meaning a large share of the influence over how that system runs sits outside the country whose landscape and communities absorb the impact.

Our exposure is a choice, highly path dependent but not fixed

None of this is fixed. An energy conscious community understands where its energy comes from, who is harmed by that supply chain, and who benefits from it — and acts on that knowledge locally. Programs like Durham's Greener Homes retrofit initiative, Saskatoon's roof top solar map, and Richmond's Lulu Island district energy utility are all, in effect, import-substitution projects: every unit of energy a community generates or conserves locally is energy it no longer has to import from a system that profits from conflict, waste, and pollution regardless of who's paying at the pump.

The bottom line: Canada's position as a major oil producer was never going to protect Canadians from a war in the Middle East — because the barrel was always headed for the export market, not the local pump. The only real insulation from that exposure is the one a community builds for itself, one retrofit, one solar rooftop, and one local energy system at a time.