Venezuela Another Reminder for Canada: It's Time to Put Pipeline Words into Action

Venezuela Another Reminder for Canada: It's Time to Put Pipeline Words into Action

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Venezuela Another Reminder for Canada Now is Time to Put Pipeline Words into Action cover

Canada ended 2025 on a stronger footing. Across the country, more Canadians and policymakers recognize that our natural resources are not a liability, but a core economic strength.

And events in Venezuela to start the year—like U.S. tariffs in 2025—are a stark reminder of the urgency for Canada to change course from a decade of cancelled projects and regulatory purgatory, and begin expediting energy and trade infrastructure development.

2026 must be the year we move from words to action. Positive intentions alone will not provide Canadians with good paycheques, attract job-creating capital investment, or fund our health care and education.

As Ontario Premier Doug Ford has said, “Canada can’t afford to wait. We need more pipelines in every direction, built by Canadian workers using Canadian steel so we can get Canadian oil to new customers around the world.”

What’s playing out today has raised the possibility that Venezuelan oil—the world’s largest reserves—could return in a big way to global markets. Analysts suggest that, while a long shot under current conditions, if capital starts flowing and significant structural changes reduce operational risks, Venezuela’s production could increase meaningfully over the next five to ten years [1].

That timeline should ring alarm bells in Canada.

As Scott Thomson, President and CEO of the Bank of Nova Scotia, put it at a Toronto conference last week, “As the Venezuelan crude [oil] re-enters the system over the next five to 10 years, having another pipeline here for Canada is really important.”

Five to ten years is roughly how long it has taken for Canada to propose, permit, and build our latest major transmission pipelines, if not longer. The same window in which Venezuela could hypothetically regain millions of barrels in lost market share is also the timeline in which Canada must add new export capacity to tidewater—or, yet again, suffer the consequences of lacking market diversification.

History has lessons on how changes in Venezuelan supply can impact Canada.

Look at the price relationship between Western Canada Select (WCS), Canada’s benchmark heavy crude, and West Texas Intermediate (WTI) light crude. In December 2018, a barrel of WCS sold for about 12 per cent of the value of a barrel of WTI—costing Canadians billions of dollars in potential revenues [2]. As sanctions tightened in 2019, Venezuelan heavy crude exports to the U.S. fell from 19.5 million barrels in January to effectively zero by July. By then, Canada’s WCS was selling for roughly 78 per cent of WTI’s value [2].

More recently, following the upheaval in Venezuela, Canada’s heavy oil price plunged, trading at the widest discount to the WTI benchmark since July 2024 [3]. The cause for the drop? No other than the competition for supplying feedstock to U.S. Gulf Coast refineries – the destination for about 10% of Canada’s total oil exports, or about 350,000 barrels per day (bpd) [3].

“It doesn't take much in additional production from Venezuela finding its way to the U.S. Gulf Coast to have an impact on prices,” said Mark Parsons, ATB’s Chief Economist via reporting by the CBC.

“That’s what we’re seeing.”

According to Economist Charles St-Arnaud, a 10 per cent decrease in Canadian oil exports to the U.S. would result in a $13-billion drop in Alberta’s revenues. These are no small numbers [9].

The private market tells another warning story.

Following the events in Venezuela over the weekend, Canadian oil equities lost $8.3 billion in market value [6]. While industry leaders saw it as a knee-jerk reaction by private investors, it revealed the general view on Venezuela’s re-emergence into global oil markets and how it could affect Canada over the long term. To be clear, the withdrawal of private equity signals that investors view Venezuelan oil as a potential risk to Canada’s future oil prospects.

Canadians should know about the economy-draining cost of the oil price differential, exacerbated by limited market diversification beyond the U.S., and how it affects our bottom line.

A $1 USD per barrel change in the WCS-WTI price, for example, results in an approximate $740 million swing in Alberta’s government budget revenues [4]. Alberta plays a critical role in the federal equalization program, which redistributes funds to ensure that jurisdictions across Canada can provide comparable levels of public services at comparable tax rates [8]. For perspective, Alberta’s net contribution to federal finances totalled $244.6 billion between 2007 and 2022—five times the net contributions from BC or ON, the only two other net contributors to equalization [8].

The expanded Trans Mountain pipeline is a positive example of how reducing this price differential benefits all Canadians. The pipeline expansion helped narrow the WCS-WTI spread by about USD $8 per barrel since operations began, resulting in an additional CAD $13 billion in revenue for Canadians between May 2024 and July 2025 [5]. This translated into several billion dollars for the public purse, including an additional $2 billion for the federal government to fund the social programs we all rely on [5].

Today, Canadians still lose billions of dollars per year due to price discounts on both our oil and natural gas resources [7].

Saskatchewan Premier Scott Moe summed up events in Venezuela perfectly: “Canada should be leading, not sidelining itself. Export capacity is not a nice to have, it’s a need to have,” he said last week when asked about how this would impact Canada.

“Saskatchewan knows that securing our economic future means securing our access to the world for our resources.”

The lesson is clear: Canada needs new pipelines; these projects must begin moving forward today—not tomorrow. Global oil and gas demand is growing, and Canadians stand to benefit immensely by providing the world with the energy it needs.

Recent developments in Venezuela are a warning and a call to action. They remind us that rising global oil demand will be met with or without Canada. They also, once again, show that, like U.S. tariffs and their impact on our economy, Canadians can no longer afford to stand on the sidelines and respond reactively to what is happening around us, after it happens.

We must take the lead, through concrete action, and determine our own destiny.

Canada has the resources, technology, and workforce to secure our economic future. What we need now is the determination to match our ambitions with real projects on the ground.

Let’s make 2026 the year we act.

Let’s build the pipelines, power lines, ports, railways, and roads that connect Canadian energy, forestry, mining, and agricultural products to global markets and maximize the value of our resources.

Let’s create more opportunities for workers, generate more revenues to support our social programs, and secure our economic future in a more competitive world.

Canada has what the world needs. It is time to ensure the world can access more of our resources and that, over time, our prosperity is less and less influenced by decisions made abroad.

SOURCES:

1 - https://rbnenergy.com/daily-posts/blog/venezuelas-oil-industry-could-be-poised-rebound-it-will-take-time

2 - https://www.theglobeandmail.com/opinion/editorials/article-canada-needs-a-pipeline-to-the-future/

3 - https://www.cbc.ca/news/canada/calgary/canadian-heavy-oil-price-plunges-wcs-wti-venezuela-9.7038160

4 - https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/budget/alberta-budget.pdf

5 - https://albertacentral.com/intelligence-centre/economic-news/year-one-of-tmx-increased-export-diversification-disappearing-oil-discount-and-c13bn-in-extra-revenues/

6 - https://calgaryherald.com/opinion/columnists/varcoe-canadian-producers-lament-overreaction-united-states-plans-venezuelan-oil

7 - https://fcpp.org/2025/04/24/the-cost-of-underselling-canadian-oil-and-gas-to-the-usa/

8 - https://www.fraserinstitute.org/commentary/albertans-simply-want-fair-shake-federation

9 - https://energynow.ca/2026/01/pipelines-are-canadas-only-defence-as-u-s-seeks-other-sources-of-oil/