As most readers know, I'm a mechanic by trade. The other day we held our regular weekly meeting and were tossed an interesting bit of news. It seems that our supply of engine oil is being cut, roughly in half, because of supply shortages and rationing.
Considering I work in an automotive dealership, that's kind of a problem. Oil changes aren't exactly some obscure service we perform three times a year. They're one of the most routine things that come through the door, and modern Toyotas use a lot of very specific low-viscosity synthetic oils. Going into our busy season, known as "Tire Season", this is a pretty nerve-wracking situation.
That said, my first reaction was probably the same one most Canadians would have. How the hell are we short of oil? I mean, seriously. This is Canada. We practically have the stuff coming out our ears. We're ranked #4 when it comes to global oil producing countries. Let's turn that into numbers, shall we?
In 2025, Canada produced an average of 5.35 million barrels every day, and Alberta accounted for nearly 84 percent of that production. Yet here I am, working in a Canadian automotive dealership, being told that the amount of engine oil we have available to us is being rationed.
Obviously something doesn't add up.
It turns out that the answer is a lot more complicated than simply having a lot of oil underground. After digging into it, I think the explanation is actually more frustrating than the question.
I think we need to be clear on one thing, which I would hope is common knowledge. The 0w20 going into your car isn't the same stuff they're pulling out of the ground. Canada isn't going to run out of crude oil anytime in the near future. It's estimated that just the Oil Sands alone can keep production going for another 50 to 140 years, depending on extraction rates.
That said, there are several industrial steps between pulling petroleum out of the ground and producing the synthetic motor oil that lubricates your vehicle's engine. We're talking about upgrading, refining, producing suitable base oils, blending those base oils with additive packages, testing the finished lubricant, packaging it and finally distributing it.
Modern synthetic motor oils make that supply chain even more specialized. High-quality Group III base oils are particularly important, and right now the international market for them is in trouble. In September 2026, the Financial Times reported that Group III base-oil prices had quadrupled since February, with some motor-oil retailers rationing supply as shortages worked their way through the industry.
I don't have enough information to claim that this global shortage is the only reason our particular dealership's oil allocation was cut. I do, however, find the timing pretty difficult to ignore.
Canada can produce crude oil by the millions of barrels and still get caught in a motor-oil shortage because we're not really a major producer of the final products that sit on store shelves and go into our vehicles. That got me wondering how we managed to put ourselves in this position in the first place.
Let's be clear about one thing. Canada didn't become an oil-producing country recently. The famous Leduc No. 1 discovery came into production on February 13, 1947, kicking off Alberta's modern petroleum boom after Imperial Oil had drilled 133 consecutive dry wells.
Only a few years later, Canada was already shipping crude oil South. From the information I've been able to gather, we actually reached a level of significant Canadian crude-oil exports to the United States sometime in 1951. Now, I realize the term "significant" is fairly relative, but it's easy to say that we were producing a lot more oil than we were using.
But if we thought 1940's to 1950's was a "Boom" then we hadn't seen anything yet. In 1967, the Great Canadian Oil Sands operation began commercial production, becoming the world's first large-scale commercial oil-sands surface mining and refining operation.
What I'm getting at here is that we've had plenty of time to think about what we wanted to do with this vast and important resource. Unfortunately we did, what could be argued as, the easiest thing to do. We sold it.
Canada has been exporting crude to the United States for about 75 years, as of this writing. Commercial oil-sands production is approaching 60 years. This entire industry has developed across multiple generations.
Which brings me to the political part of this. Before you go jumping on the Anti-Liberal or Anti-Conservative bandwagon, don't bother. There's Plenty of Blame to Go Around.
Canada didn't arrive here because of Justin Trudeau or Mark Carney. Nor did we get here because of Stephen Harper or Brian Mulroney.
Since Canadian crude exports to the United States began in 1951, the country has gone through 14 federal ministries under 13 different prime ministers, starting with Louis St-Laurent and progressing all the way to Mark Carney of today.
Liberal governments have been in power. Progressive Conservative governments have been in power. Conservative governments have been in power. NDP has been the official opposition. Pierre Trudeau even appears twice in the official sequence because his periods in office were separated by Joe Clark's government.
We've had governments from several political traditions, long-serving prime ministers, short-lived governments, oil booms, oil crashes, recessions, constitutional fights, environmental debates, free-trade agreements and everything else that happened along the way.
Through all of it, Canada remained exceptionally good at pulling petroleum out of the ground and selling enormous amounts of it as crude. If you're looking for one politician to blame, you're going to be disappointed. This took generations.
While we're on the topic of clearing up misconceptions, I should make it perfectly clear that Canada actually does refine oil, and we actually refine quite a bit of it.
According to the Canada Energy Regulator, Canada currently has 16 crude-oil refineries capable of processing about 1.9 million barrels per day. In 2025, those refineries processed about 1.6 million barrels per day, which was roughly 90 percent of their total capacity. They produce gasoline, diesel, jet fuel, asphalt, lubricants and various other petroleum products.
We also haven't simply watched all of our refining capacity disappear. Canada had around 40 refineries in the early 1970s, but many smaller and less-efficient facilities were eventually closed as demands changed and excess capacity crushed profit margins. The remaining refineries became larger and more efficient, to the point that Canada's total refining capacity today is actually greater than it was when we had those 40 refineries.
That matters, because the question I'm interested in is whether we became a little too comfortable with the consolidations and too timid to allow the industry to expand again.
Canada produced 5.35 million barrels per day in 2025 and during that same year we exported about 4.3 million barrels of crude per day, with 3.9 million going to the United States. Those U.S.-bound crude exports alone were worth approximately $126.1 billion. When you stop to think about it, that's an extraordinary amount of raw petroleum heading South every day.
There are perfectly sensible business reasons for it, of course. American refineries represent an enormous established market. Many of them have spent huge amounts of money configuring their facilities to process heavier Canadian crude. Pipelines already connect the producers to those customers, contracts exist, and everybody involved knows how the system works.
Building a refinery is also brutally expensive. Heavy crude requires considerably more complicated equipment and processing than lighter crude, and refinery margins aren't guaranteed. A multi-billion-dollar refinery can become a multi-billion-dollar headache if market conditions move against it.
If you're an oil producer and somebody on the other end of a pipeline is willing to buy millions of barrels of your product, selling it to them can make far more sense than spending billions building your own refinery. I understand why private companies made those decisions. That said, it hardly allows Canada to be self-reliant with our own resources, and that's the part where this whole setup looks a little strange to me.
As I said earlier, in 2025, Canada was sending roughly 3.9 million barrels of crude per day to the United States. That said, we were also importing about 390,000 barrels per day of refined petroleum products from the United States, worth approximately $16.9 billion. Let's do the math on that for a second here.
3.9 million barrel export = $126.1 billion in revenue.
390,000 refined imports = $16.9 billion in expense.
If we took our exports down to 390,000 to match our imports that would be;
3,900,000 ÷ 390,000 = 10
$126.1 billion ÷ 10 = $12.61 billion
$16.9 billion - $12.61 billion = We're gettin fucked...
That's a difference of $4.29 billion dollars, which equates to a roughly 34% markup just to buy our own oil back after it's been refined. Those refined petroleum products cover a wide range of things as well, including gasoline, diesel, heating oil, jet fuel, engine oils and other petroleum products. Now, with that information comes a little footnote here that's worth mentioning.
Canada imported about 485,000 barrels per day of refined petroleum products from all countries in 2025, which was actually more than the roughly 403,000 barrels per day we exported.
That said, where it gets even more ridiculous is that about 200,000 barrels per day of those imports went into Alberta, and much of that was condensate used to dilute bitumen (crude oil from the oil sands) so it can move through the pipelines to the United States. Let me say that again, for those who missed it;
- The substance we pipe to the US is called Dilbit.
- Dilbit is about 70% Bitumen and 30% Diluent.
- Bitumen is the crude oil from the Alberta Oil Sands.
- Diluent is an "oil" that helps Bitumen move thru pipes.
- Diluent is a product refined from crude oil.
- We pay to have Diluent shipped to Canada.
- We buy the Diluent from the United States.
If you still missed the point here... We buy Diluent from the United States, paying the marked-up rates as well as the costs to ship it to Alberta, just so we can blend it with our Bitumen and send it back to them via the pipes (which have fees, by the way). That's one hell of a round trip, and we're gettin screwed the whole way.
The really frustrating thing about that is that Canada has proven we can build this kind of industry. We're relying on the United States to refine our raw resources for our own usage, and we really don't have to.
The Petro-Canada Lubricants facility in Mississauga has a production capacity of up to 15,600 barrels per day. It produces automotive and industrial lubricants, base oils, greases and specialty fluids, and HF Sinclair describes it as one of the largest manufacturers of high-quality Group III base oils in North America. Its products are exported to more than 80 countries.
The technology isn't beyond us. The expertise isn't beyond us. We don't need to invent a new branch of chemistry or invest billions in research and development. What we have is a relatively thin layer of specialized downstream capacity sitting underneath one of the largest crude-oil industries on Earth. And, if I'm being totally honest, it works most of the time. Global trade fills the gaps and everything keeps moving ahead without any issues.
Until something interrupts it.
The system Canada ended up with makes economic sense when international markets are functioning properly. Companies buy materials where they're cheapest. Producers sell into the most profitable markets. Refineries specialize. Pipelines move enormous quantities of petroleum efficiently across borders.
The weakness only becomes obvious when part of the chain suddenly stops working. Having millions of barrels of crude beneath your feet doesn't help much if the problem is three or four manufacturing steps farther down the line where demand outweighs the capabilities of your factories.
At some point I think our governments needed to look beyond whether another refinery made sense on a corporate quarterly report and, instead, start considering whether we should keep our processing capability in line with our own demand.
We didn't need enough refinery capacity to process every barrel Canada produces. That would be absurd. Canadians couldn't possibly consume all of the resulting gasoline, diesel, jet fuel, lubricants and other products, so we'd simply become enormous exporters of finished petroleum products instead of crude.
I'm talking about enough capacity and enough redundancy that Canada can keep supplying our own essential domestic demand when an international supply chain takes a kick in the teeth. There is a huge difference between having the resource and being able to utilize it to meet your country's demands.
Still, I keep coming back to one thing. We started sending significant amounts of Canadian crude to the United States in 1951. Seventy-five years later, Canada is producing petroleum at record levels. We've built mines, wells, pipelines, terminals and an extraction industry capable of moving millions upon millions of barrels.
We've had Liberal governments, Progressive Conservative governments and Conservative governments during that time. Every generation inherited the system from the previous one, slightly modified pieces of it and then handed it to the next.
Somewhere along the way, I think we should have placed more value on what happens after the oil comes out of the ground.
More upgrading. More refining where it made sense. More base-oil production. More petrochemical manufacturing. More domestic capacity in the parts of the petroleum industry that actually turn raw resources into products people use.
This isn't the first time our country has run into this specific supply chain problem, but I think it's about time we focused on making it the last time. Canada has spent decades talking about energy security while being one of the world's great energy producers. Maybe we should have spent a little more time talking about supply-chain security as well.
Because having a massive oil reserve feels considerably less impressive when an interruption somewhere else in the world can leave Canadian businesses wondering whether they're going to have enough motor oil to perform an oil change.
Standing in an automotive dealership in Canada, being told that our oil supply is being cut roughly in half, certainly has a way of making the whole arrangement look about as ridiculous as it sounds.
