Canada is facing an existential crisis which lies just outside of current awareness. The U.S. regime is fully intent in "diminishing" China, to say the least. First U.S. cuts advanced chip exports, China restricts rare-earths and silver exports, and U.S. cuts exports of heavy crude to China, which China requires to make diesel and asphalt. But USA doesn't own the heavy crude inventory, so how to they cut those exports to China? They seize control of Venezuela and block those exports to China (stealing China's investments there) and are attempting regime-change in Iran to be able to tell them not to export to China. So here sits Canada, with a vast supply of heavy crude, facing trade difficulties with the Trump regime and considering exporting more crude to China. Realize the scope of actions available to the U.S. to prevent Canada from shipping crude to China, and see what a pickle we're in. But it gets worse. Based on quality research by the team at endtropy.substack.com, the following scenario becomes our bleak future. When (not if) Venezuelan crude (Orinoco Heavy) comes online, every operator in Alberta gets the same bad price for a barrel of dilbit at Hardisty, perhaps only $30.00, maybe less. A whole range of production methods instantly become uneconomic, resulting in shut-in wells – the Tier 3 producers go insolvent. Ideally, the tar sands mines should cut production but refuse to, while the producers who would destroy their fields by shutting down, are forced to. It is uneconomic to try to restart those wells and you lose 8 billion barrels of reserves, permanently.
In supplying crude to Texas (PADD3) refineries – Merey 16 (Venezuelan) and WCS (Alberta) are chemically exchangeable as feedstocks. But shipped Merey 16 has a benefit of US$7-$10 per bbl production cost and about $2/bbl for ocean shipping, compared to pipelined WCS. Venezuela wins the bid. Over 300,000 bbl/day gets shut in in Canada.
Alberta moves from a growth economy to a liquidation economy, it slowly decays – enhancing separation pressure and employees seeking U.S. Passports to follow the jobs south. Canadian producers control the PADD2 refining capacity (Chicago, Lima, Wood River) so they can supply that U.S. market for now, but for PADD3 (Texas coast), they are at the mercy of U.S. refiners, who want to buy low. Trump has promised to lower fuel costs for U.S. consumers.
Chevron can produce Orinoco crude and ship it to their own Mississippi refinery for total input cost of about US$10/bbl. Canada CANNOT compete! The contagion spreads, cutting as much national wealth as closing the entire auto industry, a drop of probably more than 5% GDP, huge loss of employment in oil and related sectors and a massive punch to Canadian bank's bottom line, sacrificing massive reserves to compensate for oil industry loan losses. Both Alberta and Canada suffer tax revenue losses and huge deficits. Apparently the government is blind to any of this or they would not have done that pathetic increase to GST rebates (election spending?).
Yes, Canada needs to "take the sign out of the window" (see Carney's speech at Davos) and find its own place in this world, meaning ending its vassal-state relationship to the former USA. Canada should take six weeks, write a new constitution, like real nations do, that is a contract between the federal government and its citizens, totally ignoring those egotistic fiefdoms, the provinces. Canada must abandon the failing institution called NATO and stop irritating the world's two super-powers, Russia and China. That means ending troop deployment along Russia's borders, ending funding of Ukraine and ending naval exercises along China's coast. Ideally, you would abandon NORAD and joint U.S./Canada military exercises and of course, any notion of Trump's "Golden Dome." If Canada really wants better trade relations with the rest of the world, especially India and China, it would make sense to begin applying for membership in BRICS, participate in de-dollarization and sell Canada's exports in (preferably) Cdn$ or in the currency of the importing country, and definitely not in US$. To be, as Carney wishes, an "energy superpower," that would include operating a petrodollar, meaning selling oil in your own currency.
People need to understand that the U.S. does not have "allies." They have three categories of relationships – vassals, enemies and potential vassals (quoting Stanislav Krapivnik). At present, Canada sits at the vassal position, so the incentive is to keep kissing the ring of DT to avoid going into the enemy category. Is that how you want to live? Canada's Goose is cooked, and it's past time to prepare for what's coming.
For a nation to succeed, rather than just survive, it needs two main things - a national purpose and cheap energy, and increasing complexity means increasing energy supply. Canada needs a national purpose which includes a unifying national structure, both can be accommodated in a new unifying constitution with a mission statement. You don't mess with consulting the fiefdoms, you just write it and call an election under the new constitution. As for energy, for a hundred years Canada has suffered from capitalist occupation with those mainly foreign countries grabbing all the best and easiest to drill oil and selling across the border at a discount. Instead of being like Australia, with no oil, Canada had it made with energy supplies that would have lasted for centuries, but sold off the best stuff as fast as possible. Now, they have to do extreme extraction methods to keep the barrels flowing. Those barrels of dilbit are 30% diluent, and guess which is more valuable - the heavy crude or the diluent?
Carney's Davos speech should have been made exclusively to Canadians, instead of using the economic elite's WEF forum to complain about DT but lacking courage to say the same things to his face. An important issue brought up in his speech was improving relations with "middle powers" such as Europe, as if Canada isn't already sucking up to Europe enough. But Europe suffers the same calamity as Canada - they have no overall purpose thus will soon be back to their past history of conflict, they have no fiscal union and have cut themselves off from cheap energy. Without their previous imports of cheap fuels from Russia, their economies collapse. Europe's main purpose these days is to attempt to make war with Russia – a very poor and disastrous choice and no substitute for real unity and purpose. Like Canada, if they can't adopt a mission statement, they will break up.
I'm highly recommending endtropy.substack.com – read and subscribe!
Leave a comment! This is a re-direct to my Substack page.
Return to Limits to Progress Main Page
If you would like to send a donation, please send an Interac eTransfer to email address below. Thank you!
©2026 Kathleen McCroskey
Send your e-mail comments and questions to: