Welcome back to This Week in Canada, where Nicolás Maduro’s capture has consequences for Canadian oil exports, some of us are having Mark Carney flashbacks, and our largest museum labels ancient Jewish artifacts as Palestinian. Let’s get to it—and Happy New Year!
The capture of Nicolás Maduro raises an important question in Canada: What does it mean for Canadian oil exports to the United States?
Canada is the world’s fourth-largest oil producer and the largest foreign supplier of crude to the U.S., exporting roughly four million barrels a day south of the border. Much of that oil is heavy crude, and many of America’s most important refineries—especially in the Midwest and along the Gulf Coast—were built to run on it. Venezuela and, to a lesser extent, Mexico, once supplied that market, but both have collapsed as reliable sources, leaving Canada as the backbone of the U.S. heavy-oil system.
Richard Masson, an energy expert at the University of Calgary and former CEO of the Alberta Petroleum Marketing Commission, told me that Venezuela’s turmoil will not unleash a flood of competing oil anytime soon. The immediate effect is likely to be a tighter heavy-oil supply and more price volatility—not a surge of new barrels.
Masson said the idea that Venezuela’s oil infrastructure can be quickly rebuilt “like Texas” is “a long range from reality.” Even in optimistic scenarios, Venezuela might add only a few hundred thousand barrels of output a day—not the million-barrel surge that some people imagine. Venezuela now produces 1.1 million barrels of crude a day, down from 3.5 million a day in the 1970s.
Venezuela’s oil sector has been hollowed out by decades of nationalization, U.S. sanctions, and political collapse. Its pipelines are corroded, its upgraders are broken, and much of the industry’s skilled workforce has fled. Today, Canada is the only producer still able to deliver large, steady volumes of heavy crude into the American refining system.
