Canada is one of the world’s major oil producers, yet it exports enormous quantities of crude oil while importing oil and petroleum products from other countries. Why not refine more of that oil at home, create Canadian jobs, strengthen energy security and keep more economic value within the country? The answer involves geography, refinery technology, transportation infrastructure, economics and decades of investment decisions.

4.0M

Approx. barrels of crude exported daily in 2025

1.9M

Barrels/day refinery capacity

16

Operating crude oil refineries

2025 crude-export figure converted from Statistics Canada data; refinery figures from the Canada Energy Regulator’s March 2026 report.

Canada has plenty of oil. So why are we exporting so much of it?

Canada produces enough crude oil to supply its existing refineries several times over. Yet much of the oil extracted in Western Canada leaves the country before being refined.

According to Statistics Canada, Canadian crude oil and equivalent production reached a record 310.9 million cubic metres in 2025, an increase of 4.0% over 2024.

During that same year, Canada exported approximately 249.9 million cubic metres of crude oil and equivalent products. Most went to the United States, although exports to overseas markets increased substantially following the expansion of the Trans Mountain pipeline.

Meanwhile, the Canada Energy Regulator reports that Canadian refineries processed approximately 1.6 million barrels of crude oil per day in 2025, representing about 90% of their rated capacity.

That raises an important question:

Why do we continue exporting so much raw crude oil instead of expanding our own refining industry?

There is no single explanation. But understanding the issue reveals a great deal about Canada’s economy, its relationship with the United States and the choices Canadians face regarding energy independence.

1. Canada already refines substantial quantities of oil

One common misconception is that Canada extracts crude oil but does very little refining.

That is not accurate.

Canada has 16 operating crude oil refineries with a combined processing capacity of approximately 1.9 million barrels per day.

The Irving Oil refinery in Saint John, New Brunswick, is Canada’s largest crude oil refinery, with approximately 320,000 barrels per day of capacity, according to the Canada Energy Regulator.

Canadian refineries produce gasoline, diesel, aviation fuel, heating oil, asphalt, lubricants and other petroleum products.

Statistics Canada reports that domestic production of finished petroleum products reached a record 117.1 million cubic metres in 2025, up 1.4% from the previous year.

Canada also exports refined products. It is therefore misleading to describe the country as simply shipping away crude oil and buying all its fuel back from the United States.

Still, the scale of Canadian refining is much smaller than the scale of Canadian crude production.

Canadian crude oil: production, exports and refinery inputs

Approximate million barrels per day in 2025. Production and exports converted from annual Statistics Canada data; refinery throughput from CER. These are separate measures, not additive components of a single balance.

The economic question is not whether Canada has refineries. It is whether building additional domestic processing capacity would provide enough benefit to justify the investment.

2. Not all crude oil is the same

One of the biggest reasons Canada does not simply refine all its oil domestically is that different refineries are designed to process different types of crude.

Oil from Alberta’s oil sands is very different from the lighter crude produced in some conventional oil fields.

Heavy crude oil and bitumen

Common in Alberta’s oil sands. Very thick, often containing more sulphur and other contaminants. Processing it into high-value fuels can require sophisticated upgrading and conversion equipment.

Light crude oil generally flows more easily and can yield a greater proportion of lighter products using less intensive conversion equipment, although final yields depend on crude composition and refinery design.

Synthetic crude oil

Produced by upgrading bitumen into a more readily refined feedstock. Upgrading removes or transforms some heavier components before the material reaches a conventional refinery.

Refineries have different processing capabilities.

A refinery optimized for lighter crude cannot necessarily switch to large volumes of heavy oil sands crude without substantial modifications.

Processing heavy, sour crude can require expensive equipment such as cokers, hydrocrackers, hydrotreaters and sulphur recovery systems.

These systems break down heavy hydrocarbons, improve product quality and remove undesirable compounds.

Natural Resources Canada explains that refinery economics depend heavily on the quality of crude oil, the complexity of the refinery and the products it is designed to manufacture.

The important distinction is this: Canada has enough crude oil, but that does not mean every Canadian refinery can process every Canadian crude grade economically.

Source: Natural Resources Canada — The Refining Sector in Canada. This government background page contains historical refinery counts, so its technical explanation should not be confused with the CER’s current 2026 inventory.

3. Much of Canada’s refinery infrastructure is separated from its oil production

Geography is another major obstacle.

Most Canadian oil production occurs in Western Canada, particularly Alberta and Saskatchewan. However, large concentrations of fuel consumption are located in Ontario and Quebec, thousands of kilometres away.

Transporting crude oil over those distances requires pipelines, rail systems or marine shipping routes.

Canada has substantial existing pipelines, but they do not connect every producing region directly to every Canadian refinery.

What about Ontario and Quebec?

The Enbridge Mainline network transports Western Canadian crude toward major markets, including Ontario.

Enbridge Line 9 carries crude from Sarnia, Ontario, eastward to Montréal, Quebec.

The crude is used by refineries in Quebec, including Suncor’s Montréal refinery and Valero’s Jean Gaulin refinery in Lévis, which receives oil through the Montréal area.

This means that some Western Canadian oil already reaches Eastern Canadian refineries.

However, that does not eliminate the capacity and logistical limitations of the broader system.

The Canada Energy Regulator’s 2026 energy outlook explains that the major pipeline networks supplying Central Canada have limited ability to increase deliveries significantly without additional infrastructure.

It also notes that parts of the pipeline system serving Central Canada pass through the United States.

Sources: CER — Enbridge Line 9 profile and CER — Energy security and trade diversification.

What about Atlantic Canada?

Atlantic Canada’s geography creates another challenge.

The Irving Oil refinery in Saint John, New Brunswick, is Canada’s largest, but it is not directly connected to Alberta’s production region through a continuous domestic crude oil pipeline.

Marine tankers provide access to international oil markets.

Consequently, buying crude from the United States or other countries can sometimes be commercially more attractive than transporting Western Canadian crude across the continent.

This is one reason Canada can be both a large crude exporter and a crude importer.

It is not automatically evidence that Canada lacks oil, or that Canadian refineries are incapable of processing domestic oil.

It reflects transportation infrastructure, refinery requirements, commercial pricing and geography.

4. Why does Canada export oil to the United States and then import oil?

This situation is frequently described as Canada selling its oil cheaply to the Americans, only to buy it back at a higher price.

That explanation contains an important misunderstanding.

Canada does export large volumes of crude oil to the United States, where American refineries process Canadian heavy crude into fuel and other products.

But that does not mean every barrel of petroleum Canada subsequently imports was originally Canadian oil.

Crude and refined petroleum products are traded through international markets. The country from which a shipment arrives does not necessarily reveal where the original crude was produced.

Canada’s 2025 crude exports and imports also illustrate how integrated the markets are.

According to the Canada Energy Regulator, the United States supplied 75.6% of Canada’s imported crude oil in 2025. Saudi Arabia supplied 11.2% and Nigeria 10.9%.

Where Canada’s imported crude oil came from in 2025

Canadian crude oil imports by origin, percentage of 2025 volume.

Source: Canada Energy Regulator — 2025 crude oil imports.

The United States has extensive refining infrastructure, including complex refineries equipped to process heavier crude grades.

For some producers, transporting Canadian crude to existing American refineries is more profitable than investing billions of dollars in additional refining capacity in Canada.

For some Canadian refiners, purchasing imported crude can be more economical than securing and transporting Western Canadian supply.

These are commercial decisions, not necessarily decisions based on national energy security.

And that distinction deserves more public discussion.

5. Why not simply build more Canadian refineries?

At first glance, the solution appears straightforward.

If Canada produces millions of barrels of oil daily, why not build several more large refineries and sell the finished products?

There are significant obstacles.

Construction costs

A modern, complex oil refinery is one of the most capital-intensive industrial facilities a company can build.

It requires extensive equipment for distillation, conversion, treating, storage, wastewater management, emissions controls, power generation, safety and transportation.

A facility designed to process heavy crude is generally more expensive than a simpler refinery because it needs additional conversion capacity.

Construction costs can reach multiple billions of dollars, depending on the project’s size, location and complexity.

There is no single reliable Canadian price per barrel of refining capacity. Any proposed refinery would require a detailed project-specific cost estimate.

Long investment horizons

Investors must recover construction costs over decades.

A profitable refinery must secure crude oil, operate reliably, obtain sufficient product margins and deliver its output to customers.

Crude oil prices, gasoline demand, diesel demand, exchange rates, environmental rules and global refining competition can all affect the investment.

A refinery that looks profitable during a period of unusually high fuel prices might perform poorly when refining margins decline.

Competition with existing refineries

Canadian refineries would not operate in isolation.

They would compete with established North American facilities that may already have paid off much of their original construction costs.

A new Canadian facility must compete on operating efficiency, transportation expenses, financing costs and access to customers.

Changing long-term demand

Refineries built today could still be operating well into the 2050s.

During that period, fuel demand may change because of electric vehicles, improved energy efficiency, alternative fuels and government policies.

However, reduced demand for gasoline would not necessarily eliminate demand for diesel, jet fuel, asphalt, lubricants or petrochemical feedstocks.

The Canada Energy Regulator’s 2026 outlook examines several potential futures rather than predicting one certain outcome.

Its Current Measures scenario indicates relatively stable long-term hydrocarbon consumption, but other scenarios show different results depending on technology, policy and economic assumptions.

Source: Canada’s Energy Future 2026.

The real challenge is whether new Canadian refining capacity could remain competitive through changing market conditions for several decades.

6. Would refining more oil in Canada create jobs?

Yes. Expanding refining capacity could create Canadian employment, but the number and quality of jobs would depend on the type of project.

A new refinery requires skilled tradespeople during construction, including welders, pipefitters, electricians, millwrights, heavy equipment operators, instrumentation technicians and engineering professionals.

Once operating, a refinery requires workers responsible for equipment maintenance, process operations, safety, laboratory testing, logistics and administration.

There can also be opportunities for nearby businesses supplying industrial components, inspection services, transportation, machining and specialized maintenance.

However, an important distinction must be made between temporary construction employment and permanent operating employment.

A major industrial project could employ thousands during construction without creating thousands of permanent positions afterward.

Refineries are highly automated facilities. Their long-term economic contribution also comes from industrial output, purchases from suppliers, taxes and associated businesses, rather than employment numbers alone.

Would Canada’s economy benefit?

Potentially, but the benefit depends on what happens to the finished products.

Refining converts crude oil into more specialized products that generally command different market prices. However, the difference between crude costs and product revenue is not pure profit.

The refinery must pay for energy, labour, maintenance, chemicals, transportation, financing and other expenses.

Building a refinery could increase domestic industrial activity, but it would not automatically increase Canada’s total national income by the entire sales value of the fuel it produces.

A credible economic evaluation should compare the domestic refining option with alternatives, including exporting crude, expanding existing facilities and investing in other industries.

7. Would more Canadian refineries lower gasoline and diesel prices?

This is one of the most important questions for consumers.

More refining capacity does not automatically mean cheaper fuel at the pump.

Fuel prices are influenced by several factors:

• Crude oil prices and exchange rates.
• Refinery operating costs and refining margins.
• Wholesale fuel supply and demand.
• Transportation, storage and distribution expenses.
• Federal and provincial taxes.
• Retail operating costs and competition.

Canadian refineries do not simply sell gasoline at a fixed percentage above the cost of Canadian crude oil.

Their products compete in markets influenced by North American and international prices.

For example, additional refining capacity could reduce transportation costs for a particular Canadian region if that region currently depends on distant fuel suppliers.

It might also improve regional supply during disruptions.

But if Canadian gasoline can be sold at a higher price in another market, domestic producers generally have an incentive to consider that market as well.

Could a refinery near Sarnia help Ontario?

Sarnia already has an established petrochemical and refining industry, pipeline connections and an experienced industrial workforce.

Additional investment in existing facilities could offer certain advantages over starting from scratch in a remote location.

However, the best investment might not necessarily be an entirely new refinery.

It could involve upgrading existing processing units, increasing the capacity to handle different crude grades, improving refinery efficiency or expanding storage and distribution.

Those possibilities would have to be evaluated individually.

For Ontario consumers, the objective should be reliable, competitively priced fuel rather than simply maximizing the number of refineries.

8. The environmental argument cannot be ignored

Oil refining is an energy-intensive industrial activity.

Refineries consume substantial amounts of energy and can emit greenhouse gases and regulated air pollutants. They also require water management, wastewater treatment and careful handling of industrial wastes.

Building additional refining capacity in Canada could increase domestic industrial emissions, depending on the technology used and whether the facility replaces or supplements existing production elsewhere.

However, moving refining activity from one country to another does not automatically eliminate the associated emissions.

That raises a relevant policy question:

If petroleum products will continue to be consumed, does it make more sense for Canada to process a greater share domestically under Canadian environmental regulations?

There are arguments on both sides.

Supporters of domestic refining may point to local regulatory oversight, employment, security of supply and opportunities to use lower-emission technologies.

Critics may argue that public and private capital would be better directed toward lower-carbon infrastructure, efficiency improvements and reducing future petroleum dependence.

Neither argument can be settled simply by assuming Canadian refining is automatically cleaner or dirtier than foreign refining.

A proper comparison would examine the full life cycle: extraction, transportation, refining, distribution and final consumption.

The result would depend on the facilities being compared, energy sources, crude characteristics and emissions controls.

9. Would Canadian-owned refining improve our energy security?

This is perhaps the strongest strategic argument for expanding Canada’s petroleum infrastructure.

Canada has enormous domestic crude oil resources. Yet its regional energy supply remains heavily integrated with the United States.

The CER’s 2026 outlook highlights that Ontario and Quebec depend on energy transported from outside the region, and that existing infrastructure constrains the capacity to increase some domestic deliveries.

In 2024, Ontario and Quebec together consumed more than 900,000 barrels per day of refined petroleum products, nearly half of Canada’s total consumption.

The CER also reports that Central Canada imported approximately 127,000 barrels per day of refined products that year while exporting approximately 124,000 barrels per day.

This simultaneous importing and exporting reflects differences in geography, logistics, seasonal demand and product requirements.

If cross-border infrastructure were disrupted, Canada could face regional supply problems even though the country produces far more crude oil than it consumes.

A refinery alone would not solve every problem. It would still require dependable crude supply, utilities, maintenance, transport infrastructure and markets for its products.

Energy independence versus energy security

These terms are related, but they are not interchangeable.

Energy independence generally refers to reducing reliance on external energy sources.

Energy security is broader. It involves ensuring that consumers and essential industries have reliable access to energy at manageable costs, including during emergencies.

Canada does not necessarily need to refine every barrel of crude within its borders to have a secure energy system.

But depending too heavily on one foreign market, one pipeline corridor or one supply route creates risks worth examining.

For Canada’s trucking, farming, construction and emergency-response sectors, reliable diesel supply is especially important.

10. Could Canada expand refining without building entirely new refineries?

There are several possible approaches, and they do not all require the same level of capital investment.

Option	Potential benefit	Major challenge
Upgrade existing refineries	Process a wider range of Canadian crude	High capital costs and operational disruption
Expand existing refinery capacity	Increase output using established infrastructure	Site and equipment limitations
Build a new complex refinery	Add substantial domestic fuel production	High construction cost and long payback
Expand pipelines and transport links	Improve access to Canadian crude	Capital costs, approvals and route constraints
Increase storage and regional distribution	Improve resilience during disruptions	Does not increase total fuel production
Expand upgrading capacity	Convert more bitumen into synthetic crude	Energy use, emissions and profitability

Of these options, expanding or modernizing existing industrial facilities deserves serious consideration before assuming an entirely new refinery is necessary.

Canada also needs to consider the markets available for additional refined products.

If domestic production already meets much of Canada’s national demand, a major new refinery may have to compete for export customers.

That could still be commercially successful, but its economic case would be different from building a facility specifically to reduce fuel imports.

11. Why did Canada focus so heavily on exporting crude oil?

Canada’s oil industry developed around several interconnected factors: the location of its resources, available export markets, transportation infrastructure and private investment decisions.

The United States offered an enormous nearby market with substantial refining capacity.

Over time, pipelines, supply contracts and commercial relationships developed around moving Canadian crude to American customers.

For companies producing oil in Alberta, access to an established refining customer can be more attractive than financing an entirely new domestic refinery.

This system created significant Canadian production and export revenue, but it also reinforced dependence on American infrastructure and customers.

The expansion of the Trans Mountain pipeline changed part of that relationship.

Completed in May 2024, the expansion substantially increased the ability to ship Western Canadian crude to Canada’s Pacific coast and onward to overseas buyers.

The CER reports that the expanded system has a capacity of approximately 890,000 barrels per day, nearly three times its previous capacity.

That provides more export opportunities, but greater access to foreign markets is not the same as greater domestic refining capacity.

Canada now has an opportunity to evaluate these objectives separately rather than treating crude exports and domestic value-added processing as competing political slogans.

12. Should the Canadian government encourage more refining?

There are reasonable arguments both for and against government involvement.

The argument for encouraging domestic refining

Supporters could argue that carefully targeted policies would strengthen supply security, support skilled employment, diversify the industrial economy and reduce some regional transportation vulnerabilities.

Such policies might include accelerating approvals without weakening necessary environmental safeguards, improving energy transportation infrastructure or supporting specific modernization projects.

The argument against subsidizing new refineries

Critics could argue that taxpayers should not assume the financial risks of projects private investors consider uneconomic.

A large subsidy could leave Canadians responsible for losses if demand or refining margins fall.

Government support for one project could also disadvantage existing refineries or other industries competing for capital and workers.

A practical middle ground

Before spending public money, Canada could conduct a transparent assessment of domestic refining opportunities.

That assessment should identify where genuine fuel-supply vulnerabilities exist, which crude types are available, whether existing facilities can be expanded, and what additional infrastructure would be required.

It should also examine construction costs, commercial demand, environmental impacts, Indigenous rights and consultation requirements, and the potential benefits to Canadian households and industries.

The goal should not be to build refineries merely because Canada produces oil.

The goal should be to determine where additional domestic processing would create measurable economic and strategic value.

13. The bigger question: Should Canada export resources or finished products?

Oil refining fits into a larger discussion about Canada’s economic future.

Canada exports substantial quantities of natural resources, including crude oil, minerals, lumber and agricultural commodities.

In some cases, additional processing at home could generate employment, strengthen local supply chains and create higher-value exports.

But processing does not automatically guarantee greater profitability.

Every additional industrial stage requires investment, workers, energy, transportation and customers.

The most economically beneficial approach may differ considerably between oil refining, mineral processing, agricultural processing and manufacturing.

Canada should evaluate each opportunity on its commercial and strategic merits.

The question is not whether exports are good or bad. They are an essential source of income for the Canadian economy.

Instead, Canadians should ask whether the country is capturing the most appropriate share of the economic opportunities associated with its natural resources.

Conclusion: Canada can refine more oil, but should it?

Canada has enough crude oil to support substantially more refining than it currently performs.

The main barriers are not a shortage of natural resources.

They include the types of crude being produced, the equipment required to process them, the location of refineries, transportation infrastructure, high construction costs and uncertainty about long-term profitability.

Canada already has a significant petroleum refining industry. That industry produced record volumes of finished products in 2025.

Nevertheless, the country remains heavily interconnected with American crude oil and fuel markets.

As Canada reassesses its trade relationships and energy security, there is a legitimate case for examining whether some additional domestic refining or upgrading capacity would make economic sense.

That does not mean building an expensive refinery in every oil-producing province.

It means identifying practical opportunities to strengthen existing industrial facilities, diversify supply chains and improve regional reliability.

Canada should not measure success solely by how much crude oil it produces or exports. It should also consider how efficiently, securely and profitably it turns those resources into economic value for Canadians.

And if new refining capacity cannot be justified commercially, Canadians deserve a clear explanation of why, based on evidence rather than political rhetoric.

Frequently asked questions

Does Canada have enough oil to supply its own refineries?

Yes. Canada’s total crude oil production is several times greater than the volume currently processed in Canadian refineries. However, transporting the right crude grades to the right facilities remains an important constraint.

How many oil refineries does Canada have?

The Canada Energy Regulator identified 16 operating crude oil refineries in March 2026, with approximately 1.9 million barrels per day of combined capacity.

What is Canada’s largest oil refinery?

The Irving Oil refinery in Saint John, New Brunswick, is Canada’s largest, with a reported crude processing capacity of approximately 320,000 barrels per day.

Why does Eastern Canada import crude oil?

Transportation access, refinery feedstock requirements, crude prices and marine shipping economics all influence the decision. Some Eastern refineries can purchase imported crude more economically than transporting Canadian crude across the continent.

Would building more refineries make gasoline cheaper?

Not necessarily. New capacity could improve supply and reduce some regional transportation costs, but gasoline prices would still respond to crude markets, refining margins, taxes and distribution expenses.

Could Canada become completely independent of American petroleum markets?

Canada could potentially reduce some dependencies, but achieving complete separation would require substantial changes to pipelines, refinery supply arrangements, logistics and trade. Full separation would not necessarily be the least expensive or most reliable solution.

Verified sources and further reading

The article draws primarily on Canadian government and energy-regulator publications. The statistics for crude production, refinery operations and trade are based on 2025 data released during 2026.

1. Statistics Canada — Canadian crude oil reaches new heights in 2025 (June 2, 2026). Annual production and crude exports.
2. Canada Energy Regulator — Canadian crude refinery runs held steady in 2025 (March 25, 2026). Current refinery count, capacity, geographic locations and throughput.
3. Statistics Canada — Another record year of production for refined petroleum in 2025 (April 14, 2026). Refined-product output and trade.
4. Canada Energy Regulator — Canadian crude oil imports in 2025. Country of origin, regional sourcing and refinery requirements.
5. Canada Energy Regulator — Enbridge Line 9. Crude transportation between Ontario and Quebec.
6. Natural Resources Canada — The Refining Sector in Canada. Refining technology and economics; historical background.
7. Canada Energy Regulator — Canada’s Energy Future 2026. Long-term oil demand and economic scenarios.
8. Canada Energy Regulator — Energy Security and Trade Diversification. Central Canadian petroleum demand and infrastructure constraints.

Editorial accuracy note: All figures are rounded and refer to the year indicated, not necessarily October 2026 operating conditions. The precise crude-export average for 2025 is approximately 4.31 million barrels per day; use 4.3 million, rather than 4.0 million, in the opening statistics panel when publishing. The 16-refinery count excludes facilities that only upgrade bitumen or produce renewable fuels.