Oil pumpjacks operating in a farmer’s field near Calgary in November, 2025.Todd Korol/Reuters
Matthew Holmes is executive vice president, international, and chief of public policy at the Canadian Chamber of Commerce
The 1970s appear to be making an unfortunate comeback. Economists are dusting off their histories of the oil shocks that bookended the decade. And whether it’s stagflation or measles, the contagions of previous generations can still haunt us.
After a 14-month stretch focused largely on tariffs and trade wars, the escalating “excursion” in the Middle East, the chokepoint at the Strait of Hormuz and the consequent rise in prices at the pumps have captured our collective attention.
With roughly a fifth of the world’s oil and liquefied natural gas moving through the Strait – not to mention more than 50 per cent of certain essential crop fertilizers and countless other supply chain staples – the tail on this beast is likely to be long, pointing consistently toward rising prices.
Indeed, Iran has suggested this war could push oil to US$200 a barrel, approximately double its current rate. Some analysts agree that may be possible.
Which brings me to how Canada can turn this oil crisis into an opportunity. What better time to emphasize the importance of our integrated continental trade and energy system than when our southern neighbour is struggling under the latest hike in its energy bills?
Opinion: Iran war risks further complicating USMCA renegotiations for Canada
Both West Texas Intermediate and Brent crude rates have shown high volatility, at one point cresting US$120 a barrel. Americans, according to The Washington Post, have seen a 32-per-cent increase in the average cost of unleaded gas in a single month.
Gasoline prices are among the most politically sensitive economic indicators. And as U.S. midterms approach, public concern is rising across party lines. Recent Ipsos polling shows nearly two-thirds of Americans expect prices to climb further over the next year. And business sentiment is hitting historic lows.
Energy goods exports are a backbone of Canada-U.S. trade, valued at about $159-billion in 2025, and roughly 20 per cent of Canada’s total goods exports. In January, 2025, Canada supplied around 65 per cent of all crude oil imported by the United States. Since 1981, the volume of barrels of oil supplied from Canada to the U.S. has steadily risen to meet demand. On top of that, our crude is sold to the U.S. at a discount while our consumers benefit from a North American supply chain that is relatively buffered from global shocks, such as the one rocking most of Europe and Asia right now.
The energy system between the U.S. and Canada didn’t develop simply because Canada had volume, geographic proximity and neighbourly spirit. It formed because of structural compatibility. Seventy per cent of the U.S. refining system – particularly in the Midwest and along the Gulf Coast – was built or upgraded to process heavy, sulphur-rich crude. Canadian oil sands production fits that requirement. In fact, without a Canadian supply (or a similar product from somewhere like Venezuela) many U.S. refineries have very few options. And as we know from Economics 101, when supply goes down, prices go up.
Canada, Mexico to kick off bilateral talks about USMCA in May
If energy security becomes a bigger concern in the lead-up to the review of the United States-Mexico-Canada Agreement (USMCA), Canada stands to benefit. Yes, we’ve seen Ambassador Jamieson Greer testify before Congress with concerns on dairy market access and provincial restrictions on procurement and alcohol sales. While these may be legitimate points of debate at the negotiation table, they are unlikely to compare to the sticker shock North American consumers will face in heating and cooling their homes if our free trade agreement goes south.
As the calculus shifts for Americans, what Canada can offer is unrivalled energy security and even deeper integration. Shoring up the U.S. energy market, for example through a revived Keystone XL pipeline expansion, could be pivotal to retaining the spirit of free trade that underpins the USMCA.
On top of having the world’s fourth-largest proven oil reserves, and the tenth-largest proven reserves of natural gas, we also have some perks that most of the cargo ships idling by the Strait of Hormuz (or Venezuela, for that matter) might only dream of: Political stability. Environmental stewardship. Democracy. Rule of law and judicial accountability.
This is the real “energy superpower” that Canada can put on the table for its closest allies and, dare I say, our neighbours. After a year of hostage diplomacy, a series of destabilizing decapitations of petro-governments, and ongoing supply chain disruptions, we shouldn’t undervalue the cards we already hold.