What's next for Canada's economy?

Trudeau's resignation, an overview of the Canadian oil economy and its overreliance on U.S. trade, and why Canada needs to go global with its resources

Picture by Canada Action | Source

Evening investors 👋,

Welcome back to today’s Deep Dive.

An overwhelming number of you reading this newsletter are Canadian. Over two-thirds, to be exact. You should know about our currently unstable political environment, terrible economy, barbaric house prices, and broken immigration system. Lately also the resignation of our less-than-beloved prime minister.

I held off on releasing my issue of “If I Were Prime Minister of Canada” a while ago after asking you all for your thoughts on its release. One of the main concerns was that a topic like so wouldn’t be as relevant to my American or foreign audiences. Which is understandable. But quite honestly, I believe it’s worth it for all of my readers to understand the Canadian economy and our resource power. That’s what this issue’s about. I’m still learning more and more about Canadian energy as the days go on, so I don’t expect this issue to be very detailed—as I don’t know many details on the topic—but I will be researching on this topic a lot in 2025, and I’m excited to do so.

Let me know what you think. Enjoy¹.

Let’s get into it. (16 min read)

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What's next for Canada’s economy?

Picture by CBC | Source

The great country of Canada is almost guaranteed to vote for a majority Conservative leadership in the House of Commons by the next election, says national polls. These polls are the same ones that pushed Justin Trudeau to resign this week, although he’s still the active prime minister until a new Liberal Party leader is chosen.

The federal Canadian election is officially scheduled for October 20, 2025, but with a recent stoppage of Parliament until the end of March, it’s very likely Canada is heading towards an early election in April or a little later. This means Canada will elect their next Prime Minister to be Pierre Poilievre, and will do so before summer starts. Meaning, we have some economic policy to review.

Canada’s economy, generalized

Canada isn’t a petrostate or anything, but oil is very important to the country. Around 20% of current exports are in some way related to oil, and 58% of total exports are natural resource exports (including oil). The natural resource reserves alone we have across the country are massive, and 60–70% of this energy isn’t extracted, mined, or otherwise utilized.

To make matters worse, our government has huge policies and long approval systems for building more mines or approving new oil rigs, which has limited Canada from really tapping into its vast resources to profit and gain wealth for itself and its citizens.

For the small amount of rigs, plants, or mines the government does approve to extract resources, 78% of it is sold to the United States exclusively.

Canada is ranked fourth in the entire world by the value of our total resources, third in the world by total oil reserves, and we have the most freshwater on earth (a fact I thought I’d add), yet somehow we have enormous trade deficits, we can’t afford social programs and infrastructure projects, have a weak military, and we tax our citizens in every way possible, as high as possible (these are a very small amount of the many issues). The fact we have such a weak dollar is because of these trade deficits, I should mention. Trade deficits we shouldn’t even have.

So when the question of affordability or low wages comes up, or any other issue we have in Canada that relates in part to any major way to the economy (which is many), it leads back to one simple question: why not streamline approvals, ramp up production, and sell beyond just the United States to answer our problems? It really is that simple. Canada is an extremely rich and wealthy nation, but its people and its nation are poor. It just doesn’t make sense.

Expanding the sale of our resources and energy worldwide to make Canada and Canadians richer is among the top ways to make Canada one of the best countries on earth in every aspect possible. I’m anti-U.S. heavy reliance and pro-global selling of our energy and resources, and I care greatly about the many benefits selling our resources will do for Canada over the long term.

Canada itself, which is a different issue, is a renewable energy country, with 70% of Canada’s electricity coming from renewable sources and 82% from non-greenhouse gas sources. From this ramp-up in selling our resources, more particularly crude oil and natural gas, since we don’t need it for our energy needs, could be going towards the high-growth, energy-needy African and Asian countries for top dollar, instead of to the United States that constantly rips us off for our poor infrastructure and low prices.

Before I get into the thoughts on Poilievre’s energy policy proposals, I’d like to take some time to go over that last comment: how America is ripping Canada off—or Canada ripping itself off—by selling its oil exclusively to the States.

Picture by Energi Media | Source

Canada is ripping itself off

I couldn’t find any fancy graphs like the above for current prices, but as of the time of writing, the Western Canada Select (WCS) trades for about $62.15 per barrel, compared to the $73.20 of the West Texas Intermediate (WTI). That’s about a 15% discount for Canadian crude oil when compared to its American peer. Canadian oil historically usually trades around 15-30% less than international pricing, on average.

Because of the many policies opposed to oil in Canada, and the approval times and regulatory processes it takes to actually build and get a plant or refinery approved, Canada, as a consequence, has the poorest oil infrastructure of any oil-rich nation. We have too much red tape. Most of Canada’s oil infrastructure is made for entering the United States, where Canada sells its raw crude to be refined in the States, who then upgrade it, refine it, and sell it at a much higher price if they so please.

We don’t have the approval process to improve oil infrastructure across our country and continue to sell our oil because of this at much lower prices. We don’t have any international oil infrastructure or pipelines, nor do we have nationwide oil infrastructure. Again, not like we need nationwide oil infrastructure as most of Canada is renewable now, but this is the reason Ontario has to buy oil from Saudi Arabia, and why we sell our oil at such hefty discounts to the United States. We have no infrastructure.

Countries like Germany, France, Japan, and many more have asked for our natural resources, particularly oil, before, but we haven’t been able to give it to them. Why? Because of our limited oil infrastructure. We need a shift in policy, a streamlining of approvals, and a push towards supplying our energy across the world to give Canada the best return, before the world inevitably shifts renewable completely and doesn’t need our energy anymore (which is a long time for the entire world, but for the rich Western countries, less than two decades).

This is what would be the best course for the Canadian economy. And the factual statement on our leadership direction to get to this best course has been abysmal. I’ll give Trudeau some slack by saying he had a bad economic environment and a terrible Canadian economic environment since the pandemic that wasn’t directly his fault, but of everything else during his tenure, he put zero effort into fixing any problems of Canada. He loved being prime minister, but he hated the job that came with it. (I don’t write with a political bias, keep in mind. These are objective facts, none of this is subjective.)

Pierre Poilievre’s thoughts (exclusive)

Last Thursday, Jordan Peterson and the expected next Prime Minister of Canada, Pierre Poilievre, sat down for a 2-hour interview where they discussed a variety of topics about Canada. I’d highly recommend watching it if you’re Canadian—it’s an awesome and very informative discussion to listen to. (I do realize there are controversial opinions about Peterson and possibly even Poilievre, but that doesn’t take away from the value you’ll receive by watching this interview.)

Out of this 2-hour interview, 40 minutes were paywalled on The Daily Wire+ under a subscription. In this paywalled section, they discussed Canadian energy and the U.S.-Canada relationship, which Peterson thought suited the interests of the American-heavy Daily Wire+ viewership. Since I’m an absolute nerd, I paid the CA$25 paywall for a one-month subscription, recorded the entire exclusive interview while I watched, then cancelled my membership, before later transcribing it with the help of Apple’s Voice Memos app. I learned a lot from paying this $25. Much more than I expected of the topics they talked about, and at a much faster rate than if I hadn’t paid it, so I’m very pleased.

I wouldn’t ever waste my money on a Daily Wire subscription though, as it contains possibly the worst consumer value proposition known to man.

For those who don’t want to pay this amount, I’d like to share a specific part of this exclusive interview, where Poilievre talks about his plans for the economy and Canadian resources and energy once he’s in office. Obviously, I can’t share the entire interview transcript without attorneys knocking at my door, but I can share the energy discussion, which falls in line with the topic of this post and is therefore shareable under fair use law.

I’ll share my thoughts at the bottom of this quote from their exclusive conversation:

²“Peterson: Okay, so what would a great deal look like, as far as you’re concerned, with the Americans on the energy side? Now, one of the things that Trump pointed to was Canada's trade surplus with the U.S.—$100 billion. That was his estimate.

Poilievre: It depends how you measure it. Other estimates have it around $40 billion, but he’s right—there is a Canadian trade surplus with the States. And look, from the mercantilist point of view, you can say that America has been ripped off by China and Mexico. You can see examples of a factory closing in Ohio or Pennsylvania to open in Mexico or China, but that’s not the nature of the Canadian trade surplus. It’s not because the Canadian economy has been taking American jobs—far from it.

The nature of our trade surplus with America is that, yes, it is a rip-off. Canada is ripping itself off. And let me explain. Our entire trade surplus—and more—is due to oil and gas because we export about $120 billion of oil and gas to the United States at enormous discounts to market price. This is because we have been so shortsighted, and our bureaucrats have been so obstructive, and woke activists have been so fanatical that we have not been able to develop the infrastructure to refine and transport our own energy to world markets.

So, depending on the time, we sell a barrel of oil to the Americans for 10%, 30%, or even 40% cheaper than the world price. There’s a price called Western Canada Select that’s significantly lower than WTI. Up until recently, at least 99% of our oil exports went to America.

They then get to upgrade it and resell it at enormous profits, with their welders, pipefitters, and engineers earning six-figure salaries that go along with that. We give all of our natural gas exports to the United States because we don’t have an operating liquefaction plant to send it overseas ourselves. So, they get our natural gas at massive discounts and then can decide if they want to liquefy it and ship it off to world markets at literally five times the price. That is the trade surplus he’s talking about.

Now, if he were to stop that today, it would mean that American workers at refineries and other value-added places would lose their jobs, and Americans would pay higher energy prices. So, that would not be good for America.

In the long run, I’ll be very blunt—I intend to approve refineries, LNG plants, and hopefully pipelines so that we can bring that production back to Canada and make ourselves more energy independent. But in the short run, if President Trump wants to make America richer, the last thing he should want to do is block the underpriced Canadian energy from entering his marketplace. In fact, what I would encourage him to do is approve the Keystone pipeline so that we can create jobs for American workers who will build and install it, but also create much more wealth for Alberta and Saskatchewan by having their product reach tidewater in the U.S. Gulf Coast and achieve world prices.

So, that’s an economic win. It’s not just oil and gas, though. We have the strategic minerals that are necessary for warfare and the modern digital economy in Canada that we could be exporting to the United States, breaking both of our dependencies on China.

We also have energy. We have a major surplus of electricity—a surplus that we could even grow further—that could be used for data centres that America cannot build fast enough. There are enormous opportunities for both of us to get vastly richer if we actually deepen our trade relationship rather than block it.

Peterson: Right. Well, it seems highly probable to me that that would be the direction the Trump administration would turn to if they were negotiating with people who were playing a straight game and actually aiming for something like economic prosperity instead of whatever it is that Trudeau’s aiming for now. You made brief reference to something quite shocking—the full import didn’t really strike me until your comments.

So, the fact, for example, that Trudeau turned away the Chancellor of Germany and the leader of Japan when they came cap in hand to Canada asking for increased natural gas exports over the long run... Also, man, given that we refused that, we ended up maintaining our low-cost contracts with the United States and selling them all our resources at a discount. So stupid. That’s the business case Trudeau couldn’t make.

Poilievre: Well, what I would say—and I hate to say this—is that because we’ve blocked LNG plants, pipelines, and other energy infrastructure, and because we’re giving, therefore, our gas to America at a 70–80% discount to European and Asian prices, and our oil at a discount of 20–30%, we’re effectively throwing money out the window. What do you do when someone throws money out the window? Stand next to the window.

So that’s the true story—it’s the pathetic story of our trade surplus. We’re actually handing over our resources stupidly. It’s not the Americans’ fault—it’s our fault. We’re stupid. And I’m going to stop that when I’m Prime Minister. We’re going to build this infrastructure ourselves.

In the meantime, it would be bad for American workers and consumers for the President to tariff our oil and gas. Look, we have an integrated economy. I think an automobile crosses the border something like eight or nine times between Ontario and the manufacturing states of the U.S. before it becomes a finished product.

Why interrupt those supply chains? Also, why not allow Americans to have access to our minerals—or better yet, why don’t we improve them here in Canada before we sell them to the United States? This would break our dependence on hostile foreign powers.

By the way, I would say to President Trump that the gains Canada gets from increased access to the United States, I would spend largely on continental defence. We’d have a more powerful Canadian military that truly secures the Arctic, protects us against terrorists, intercontinental ballistic missiles, and other global threats.

We could have a bigger and more powerful military with a bigger and more powerful economy. Our interests overlap overwhelmingly, and that’s the case I’d make to the incoming President, who has proven he’s good at and likes to make deals.

Peterson: So, what’s your negotiating strategy as you look into the coming years? You’re still operating in opposition, concerned with your chances in the next election. So, it’s not precisely time to turn your attention to international affairs, but that time is approaching. What do you see as Canada’s optimal strategy in dealing with the pesky Americans?

Poilievre: What I would say to the Americans is: let’s take out a map of our shared continent. Here’s the 49th parallel. Where do you believe we need to do more to protect our shared security across that map? This includes the northern border. Of course, the Arctic—how do we get Chinese and Russian submarines and spy balloons out of our continent and our airspace?

How do we keep terrorists out of our continent? How do we secure the border against the dreadful poison of fentanyl? Then let’s come up with a plan to do that, and we’ll do our part.

Peterson: Okay, so start with border security and military issues, perhaps?

Poilievre: Yes, because I think that’s what they’re really concerned about. Canada’s trade with the U.S. is nothing like the China-U.S. relationship. I don’t think they have serious economic grievances with us. What they are saying is: you need to do your part. You’re the second-largest country in the world—you need a military that will protect your territory.

And I think we can say to them: I can fund a more robust military and continental defence if I have more free trade with the greatest economy the world has ever seen. We can both win. So, it goes from zero-sum to a positive sum for both countries.

I think that’s a deal President Trump would take because it’s good for America and Canada. That’s the deal I’d push.

Peterson: Let’s talk about key resources. Alberta has the third-largest fossil fuel resources in the world—something approximating that. There’s plenty of natural gas in places like Quebec, which isn’t that well-known. Saskatchewan has immense resources. So what do we do? We lock the American and Canadian economies more tightly together on the energy side while simultaneously looking for international exports for natural gas and oil in Canada. That would push us closer to the international price. I suppose that would be the long-term strategy.

Poilievre: Yes.

Peterson: We have oil, natural gas, and electricity. The other key minerals…

Poilievre: We’ve got everything, basically, in Canada. You want it, we’ve got it. We have the Ring of Fire in Northern Ontario, brimming with strategic minerals. We have the fifth-largest supply of lithium and the largest supply of uranium in the world, including uranium perfectly suited for nuclear power. We also have the state-of-the-art CANDU reactor we can sell. We have prodigious rivers that can produce phenomenal amounts of electricity with zero pollution.

We have all the energy the world needs and that can power our continental economy. I actually intend to produce vastly more energy by quickly approving new power plants, LNG projects, and nuclear plants. Let’s speed up the approval of these projects so we can become the world’s greatest energy superpower.”

It’s safe to say I agree with everything Pierre Poilievre is saying here. Whether or not you agree with his political stances, his claims—and more importantly, his proposed plan—not only closely align with what I have personally been advocating for and writing about in the comments of some posts on Blossom for over a year now, but are absolutely correct.

I understand that he talks a good story. There aren’t many great alternatives to him in the election too. So this combination of solid plans and no viable alternative is what will inevitably help him win. But it all depends on action. He needs to provide proof of his commitments now for when he’s in office, to back up the votes he’s projected to receive.

And this is a tough battle to win in politics.

I agree with him about our energy policies, our relationship with the U.S., and the idea of using newfound funds from oil and natural resource expansion globally to build a more robust military—particularly in the Arctic (which is a topic that deserves its own post, alongside the mention of nuclear energy). However, the real question is, will he follow through with what he’s saying? That, is something Canada needs to hope for.

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Thanks for reading. Feel free to reply to this email or comment on the web if you need anything—I always reply. If you enjoyed today’s issue, feel free to share it with friends and family.

All the best,
Jacob

All my links here.

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An in-depth Stock Analysis on Palantir Technologies Inc is out next Wednesday to paid subscribers. If you’d like to read this when it comes out, upgrade to the paid membership (thank you to all, something big planned when we hit 500 paid subs):

1. Ignore my use of saying “my” to refer to Canada throughout today’s post.

2. I edited some words out, including filler words like “um” that showed up in this transcript, as well as some redundancy and double words from stuttering. Everything is left untouched other than that.