WHAT WOULD CANADIAN FUEL SECURITY ACTUALLY COST?

By Gord Moose, with Leonard Buffalo
Research and fact-checking: Frank Facts and Walter Beaver

Yesterday, North of Polite asked a deceptively simple question:

Canada has the oil. Can we guarantee the fuel?

We discovered that Canada already produces enormous quantities of gasoline, diesel, aviation fuel and other petroleum products.

We also discovered something more important.

The problem isn’t simply that Canada needs more refining capacity.

It is that we don’t always produce the right fuel, in the right place, with the infrastructure to move it where Canadians need it.

So today we’re asking the expensive question.

What would it actually cost to change that?

Before anybody reaches for Ottawa’s chequebook, we need to make something clear.

North of Polite is not an engineering firm.

We don’t know whether every refinery can be economically expanded. We don’t know which pipelines could be enlarged without detailed engineering studies. We don’t know where every additional storage tank should go.

And anybody claiming to know the exact national price tag before doing that work is getting ahead of the evidence.

What we can do is examine what Canadian industry is already accomplishing, identify the pieces a national fuel-security strategy could require, and determine what would have to be studied before Canadians were asked to pay for it.

So that is what we did.

Rule number one: don’t build what we don’t need

Canada has 16 crude-oil refineries capable of processing approximately 1.9 million barrels per day.

In 2025, they processed approximately 1.6 million barrels per day, averaging about 90 per cent utilization.

That suggests the first question shouldn’t be:

Where do we build another giant refinery?

It should be:

How much more can we get from the refineries we already have?

There is already evidence that the answer may sometimes be significant.

In 2026, Suncor formally increased the rated capacity of its four-refinery network by 10 per cent—from 466,000 to 511,000 barrels per day.

Suncor says operational improvements allowed its refineries to safely operate beyond their previous rated capacities.

That doesn’t mean every Canadian refinery has another 10 per cent hiding behind a troublesome valve.

It does demonstrate why Canada’s first step should be a refinery-by-refinery engineering assessment rather than immediately pouring concrete.

Find the bottlenecks first.

Then make the fuel we actually need

Part One uncovered one of the strangest numbers in this investigation.

In 2024, Ontario and Quebec imported approximately 62,000 barrels per day of gasoline while exporting approximately 50,000 barrels per day of diesel.

Nearly one-third of the region’s aviation fuel was imported.

The Canada Energy Regulator says significantly increasing domestic aviation-fuel production in Central Canada would likely require significant changes to existing refinery infrastructure.

That gives us a target.

Not simply “refine more.”

Better match Canadian refinery output to Canadian demand.

Depending on the refinery, that could require changes to the equipment and processes used to produce different petroleum products.

Some changes could be relatively modest.

Others could require major capital investment.

And some may simply not be worth doing.

That last sentence matters.

Energy security does not give government permission to turn uneconomic projects into permanent taxpayer monuments.

We know refinery investment creates jobs

We don’t have to speculate about whether major refinery work employs skilled trades.

Irving Oil is investing $235 million in a 75-day turnaround at its Saint John refinery.

The project includes infrastructure replacement, equipment upgrades and a major revamp of the refinery’s Residual Fluid Catalytic Cracking Unit.

Approximately 2,100 additional skilled workers from more than 55 contracting companies are involved.

Irving says 19 trades are represented, including welders, pipefitters, boilermakers, instrumentation technicians, scaffolders, labourers and bricklayers.

The company estimates the workforce hours are equivalent to more than 440 annualized jobs, with more than $14 million in economic spinoffs in New Brunswick.

Leonard Buffalo might put this somewhat less delicately:

Those aren’t theoretical jobs in an economic model.

Those are people wearing work boots.

But we should be equally careful with the other side of the equation.

A large construction workforce does not mean thousands of permanent refinery jobs afterward.

Turnaround and construction jobs end.

A credible national plan must report both numbers.

The pipeline problem

Improving refinery output accomplishes little if the product can’t get to the people who need it.

Central Canada already has a major refined-products artery.

The Trans-Northern Pipeline carries gasoline, diesel, aviation fuel and heating fuel through Ontario and Quebec.

Its capacity varies considerably by segment, ranging from approximately 60,000 barrels per day on one segment to 132,000 barrels per day on another.

That matters.

A national fuel-security strategy would therefore have to examine individual pipeline segments, terminals and storage facilities to determine where bottlenecks actually exist and whether targeted expansion would improve resilience.

Again, the operative word is targeted.

Building an enormous new pipeline because someone drew a straight line across a map is not a strategy.

Finding the places where another pump station, terminal expansion, storage facility or pipeline modification meaningfully increases resilience might be.

Then comes the reserve

This was one of the more surprising things we found.

Canada does not maintain publicly held emergency oil stocks.

As a major net oil exporter, Canada is not subject to the International Energy Agency’s 90-day emergency-stockholding obligation.

Canada also does not impose compulsory emergency stockholding requirements on industry.

Our existing oil inventories are commercial stocks.

The International Energy Agency has reported that Canadian industry stocks have historically averaged roughly 75 to 85 days of forward demand.

That sounds reassuring.

But commercial inventory and strategic inventory are not the same thing.

One exists as part of companies’ normal operations.

The other exists specifically so a country can respond to a serious disruption.

North of Polite therefore thinks this question deserves serious study:

Should Canada have a Strategic Fuel Reserve?

Not simply millions of barrels of crude sitting underground in Alberta.

A geographically distributed reserve containing some combination of the finished fuels Canadians actually use—gasoline, diesel and aviation fuel—positioned near major consumption centres and critical transportation corridors.

Why consider finished products?

Because crude oil doesn’t fuel an ambulance.

It doesn’t fuel a transport truck.

And it doesn’t fuel an airplane.

A refinery has to turn it into something useful first.

If the emergency is the refinery itself going offline, access to crude alone doesn’t solve the immediate problem.

That doesn’t automatically mean a finished-fuel reserve is superior to a crude reserve.

Finished products present their own challenges, including storage, product specifications, turnover and cost.

The right answer might ultimately be crude.

It might be finished fuels.

It might be a combination of both.

That is precisely what a proper study should determine.

How large?

Our original working model considered approximately 30 days of essential transportation-fuel requirements.

After examining the evidence more closely, we’re not going to pretend we know that 30 days is the correct number.

The reserve should instead be sized around a defined emergency.

How long would Canada need to cover essential transportation if a major refinery went offline?

What if an important pipeline were disrupted?

What if marine imports were interrupted?

Which services would receive priority?

How much commercial inventory would normally remain available?

Until those questions are answered, picking 30, 60 or 90 days because it sounds reassuring would be backwards.

Define the risk first.

Then size the reserve.

And because Canada is enormous, geography matters as much as volume.

Fuel stranded thousands of kilometres from the emergency isn’t much of a reserve.

So what might the whole thing cost?

This is where North of Polite originally tried to build a preliminary national cost range.

Then Frank Facts and Walter Beaver started chewing on it.

And they were right to.

Without refinery-by-refinery engineering studies, pipeline assessments, a defined strategic-reserve size, storage locations, environmental requirements and negotiations with the private companies that own most of this infrastructure, there is no defensible national price tag yet.

We could manufacture one.

We’re not going to.

What we can identify are the major cost buckets:

1. Refinery audits, reliability improvements and debottlenecking

Determine how much additional useful production existing facilities can achieve before major construction is considered.

2. Selected refinery reconfiguration

Determine whether facilities can economically adjust their gasoline, diesel and aviation-fuel output to better match Canadian demand.

3. Product pipelines, terminals and storage

Identify the actual transportation bottlenecks and determine which expansions materially improve national or regional resilience.

4. Strategic reserve infrastructure and inventory

Determine what should be stored, where it should be stored, how much Canada actually needs and how the inventory would be rotated and released.

Only after those four pieces are engineered can Canadians be given a serious price.

But Canada has studied strategic storage before

There is a useful historical benchmark.

A 2019 feasibility study supported by Alberta Innovates examined a government-owned strategic petroleum reserve in Alberta using underground salt caverns.

Its economic model examined a 10-million-barrel reserve and estimated a total discounted cost of approximately $630 million, including roughly $132 million in construction costs, with the remainder primarily associated with acquiring and holding the oil.

But there are several enormous cautions.

The study used 2018-era assumptions.

It examined crude oil—specifically an Alberta storage concept—not the geographically distributed gasoline, diesel and aviation-fuel reserve we’re discussing.

And the study itself recommended additional research.

So we’re not using $630 million as today’s price.

We’re using the study for something more modest:

Canada has examined strategic petroleum storage before, and there is Canadian technical work from which a modern study could begin.

What could Canada get for the money?

Potentially several things.

More reliable domestic fuel supply.

Additional flexibility, storage and transportation options could make refinery outages or international disruptions less likely to become immediate regional shortages.

Notice the word could.

The benefit depends entirely on what infrastructure is built and where.

Less exposure to imported finished fuels.

Not zero imports.

That isn’t necessary.

Trade can increase resilience by providing multiple supply sources.

The objective shouldn’t be autarky.

It should be reducing vulnerabilities that Canada decides are unacceptable.

Skilled-trades employment during construction and modernization.

Welders.

Pipefitters.

Boilermakers.

Electricians.

Instrumentation technicians.

Engineers.

Heavy-equipment operators.

Scaffolders.

Labourers.

And the businesses that feed, house and supply them.

But we are deliberately not attaching a national jobs number to this proposal yet.

We don’t know the project scope.

Therefore we don’t know the job count.

Irving’s Saint John project demonstrates that major refinery work can mobilize thousands of workers.

It does not tell us how many jobs a national program would create.

More Canadian industrial activity.

Where economically justified, additional refining and infrastructure investment could keep more value-added industrial activity in Canada.

Emergency insurance.

A strategic reserve has little value on an ordinary Tuesday.

That is the point.

Neither does a fire extinguisher.

Its value appears on the day the ordinary system fails.

But what could Canada lose?

This is where we apply the same test to our own idea that we apply to government proposals.

There are real risks.

The money could be spent elsewhere

Whatever the eventual number is, capital devoted to fuel-security infrastructure cannot simultaneously be invested somewhere else.

If governments provide grants, tax incentives, equity, loans or loan guarantees, Canadians would need to know exactly what public money is at risk and what security benefit they’re buying.

If private companies provide the capital, they will still expect an economic return.

Either way, there is no free refinery.

Refining creates emissions

Refineries are major industrial facilities.

Increasing throughput can increase total emissions unless efficiency improvements or other measures offset them.

Canadian large industrial facilities operate under federal or provincial industrial carbon-pricing systems.

The federal government’s current benchmark lists a 2026 headline industrial carbon price of $95 per tonne of CO₂ equivalent, rising to $100 in 2027.

Any serious modernization study should therefore examine emissions, efficiency and environmental effects alongside capacity and security.

If we’re rebuilding equipment anyway, we should at least know what the alternatives cost.

Fuel demand can change

This may be the largest long-term financial risk.

Gasoline demand is not guaranteed to rise forever.

The Canada Energy Regulator’s 2026 Current Measures scenario projects gasoline demand in Ontario and Quebec declining steadily toward 2050.

Diesel demand remains comparatively stable initially and then gradually increases.

Jet-fuel demand grows as well; CER projects Central Canadian jet-fuel use increasing 18 per cent between 2023 and 2050 in that scenario.

The CER is explicit that its scenarios are not predictions. They illustrate how Canada’s energy system could evolve under different assumptions.

That uncertainty is precisely why flexibility matters.

A refinery investment that improves reliability and the ability to adjust product output may remain valuable as demand changes.

A multibillion-dollar facility designed around one product whose demand later falls could become a stranded asset.

And none of this guarantees cheap gasoline

This point needs to be printed in letters large enough for Frank Facts to see from across the office.

CANADIAN FUEL SECURITY WOULD NOT DISCONNECT CANADA FROM WORLD OIL PRICES.

Crude oil is internationally traded.

Canadian refiners operate in international markets.

Taxes still exist.

Transportation still costs money.

Companies still require a return on investment.

A well-designed fuel-security strategy might reduce exposure to particular regional shortages, transportation bottlenecks or emergency supply disruptions.

It might make the system more resilient.

That is not the same thing as promising permanently cheap gasoline.

Anyone making that promise should show their homework.

So is it worth it?

We aren’t answering that yet.

And after this fact-check, we’re deliberately not pretending we know what the final bill would be.

First we need the engineering.

We need to know which refineries can actually increase useful output.

Which ones can economically change their product mix.

Where pipeline bottlenecks really exist.

How much suitable storage already exists.

Whether Canada needs a crude reserve, finished-fuel reserve or both.

How large that reserve genuinely needs to be.

What companies would invest themselves.

What governments would be asked to contribute.

How many temporary and permanent jobs would actually be created.

What the environmental consequences would be.

And what measurable improvement in Canadian fuel security we’d receive in return.

Only then can Canadians decide whether the insurance premium is worth paying.

But we can say something now that we couldn’t say when this investigation began.

Improving Canadian fuel security does not necessarily require building an entirely new national refining industry.

We already have one.

And Canadian companies have demonstrated that existing refineries can sometimes produce more through targeted investment and operational improvements.

The real question may not be:

How many new refineries does Canada need?

It may be:

How intelligently can Canada use and improve the refining system it already has?

And that brings us to the final question in this series.

Canada is simultaneously considering major new energy infrastructure intended to get more Canadian crude to overseas markets.

So in Part Three we’re going to put the objectives beside each other.

Not to declare a winner.

But to ask:

Why couldn’t Canada do both?

Strengthen the security of the fuel Canadians need.

Maintain profitable energy exports.

Diversify Canada’s overseas markets.

And determine whether those objectives can fit into the same national energy strategy.

That’s Part Three.

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NEXT: PART THREE — WHY NOT DO BOTH?

If Canada is prepared to spend tens of billions getting Canadian crude to foreign customers, what would it cost to strengthen Canadians’ access to Canadian-refined gasoline, diesel and aviation fuel—and could both objectives be achieved together?

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