Why Canada Is Unlikely to Sell the Last Barrel of Oil

This policy brief by the International Institute for Sustainable Development (IISD) argues that Canada is unlikely to be the last country to sell oil due to a combination of declining global demand, price volatility, and higher production costs compared to Middle Eastern competitors. While Canada's heavy reliance on U.S. refineries provides a temporary buffer, the document suggests that ESG credentials will not protect market share and that the sector faces an existential threat as the world moves toward a post-peak oil market around 2030.

• Canada's oil exports are heavily concentrated in the United States, which provides a temporary buffer against falling global demand, but this protection is limited. In 2021, 94% of Canada's crude oil exports went to the U.S., with 80% being heavy crude from Western Canada's oil sands. However, U.S. demand is expected to drop, with the Inflation Reduction Act projected to reduce petroleum product demand by 2.1 million bpd by 2030 and 4.1 million bpd by 2035 compared to 2021 levels.
• Environmental, social, and governance (ESG) credentials will not help Canadian oil producers maintain or grow their market share because the refineries that purchase the crude prioritize quantity, quality, and price over ESG factors. Furthermore, the document asserts that Canada's overall GHG intensity of production is not world-class and notes significant environmental and human rights concerns regarding oil sands operations and orphaned wells.
• Canada faces a significant cost disadvantage compared to its primary global competitors, particularly those in the Middle East. As of November 2022, the weighted average breakeven oil price for Canadian producers was USD 35.21, but the document notes that other countries will remain profitable long after Canadian production becomes unviable in a shrinking market.
• Global oil demand is expected to peak around 2030, followed by a significant decline. This trend is likely to lead to a 'savage' post-peak market characterized by low and volatile prices, as national oil companies may increase production to meet domestic policy goals despite falling demand, potentially undermining OPEC and OPEC-plus discipline.
• The transition to a post-peak oil market poses an existential threat to the Canadian oil sector, likely resulting in the failure of marginal producers, low profits for efficient ones, and significant job losses. The document concludes that Canada must urgently diversify its economy into sectors that can replace oil as a driver of prosperity.
• Alberta faces a substantial liability crisis regarding orphaned oil and gas sites. As of September 2022, there were 3,309 orphaned sites. The Orphan Well Association had CAD 169 million in assets against estimated cleanup costs of almost CAD 700 million, while total liability estimates for all existing sites could reach CAD 260 billion.

APA

Cosbey,, A. (2022). Why Canada Is Unlikely to Sell the Last Barrel of Oil. International Institute for Sustainable Development. https://www.iisd.org/articles/deep-dive/why-canada-unlikely-sell-last-barrel-oil

Chicago

Cosbey,, Aaron. Why Canada Is Unlikely to Sell the Last Barrel of Oil. International Institute for Sustainable Development, 2022. https://www.iisd.org/articles/deep-dive/why-canada-unlikely-sell-last-barrel-oil.

Wikipedia

{{cite report |last1=Cosbey, |first1=Aaron |title=Why Canada Is Unlikely to Sell the Last Barrel of Oil |publisher=International Institute for Sustainable Development |date=14 December 2022 |url=https://www.iisd.org/articles/deep-dive/why-canada-unlikely-sell-last-barrel-oil |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cosbey2022why, author = {Cosbey,, Aaron}, title = {{Why Canada Is Unlikely to Sell the Last Barrel of Oil}}, institution = {International Institute for Sustainable Development}, year = {2022}, month = dec, url = {https://www.iisd.org/articles/deep-dive/why-canada-unlikely-sell-last-barrel-oil}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }