Without question, recent oil market stability amid geopolitical tension and the completion of Canada’s Trans Mountain pipeline expansion have highlighted North America’s evolving role as a global energy powerhouse. As has been highlighted recently including in Jennifer Dowty's discussion with TD chief economist Beata Caranci, our energy security hinges on more than just stable crude supply. A resilient North American energy sector depends on both reliable refining capacity and the infrastructure needed to process and distribute the full range of petroleum products that power our industries and sustain our economy.
While the crude oil supply appears stable, with North America bolstered by increased domestic production and new infrastructure, the capacity to refine that crude remains a critical factor in ensuring stability. Refined products are essential not only for fuel but also as raw inputs for other industries. For example, needle coke, a petroleum byproduct, is vital for producing graphite electrodes used in electric arc furnace (EAF) steelmaking, a cornerstone of Canada’s sustainable steel industry. Similarly, refining byproducts like needle coke are critical for materials used in batteries (including those for EVs), renewable energy infrastructure (wind turbine blades and solar PV wafers), and material inputs for munitions production something desperately being sought by the US and other allies. These industrial supply chains depend on the availability of refined products, which require complex, specialized refinery systems that can be costly and time-intensive to expand.
The potential for crude oil oversupply moving into 2025, as Ms. Caranci noted, only underscores the need for robust refining capabilities. Without adequate refining infrastructure, an excess of crude supply may offer limited benefits, as the downstream capacity to convert it into usable products would lag. Lead times for expanding this infrastructure are significant, given the precise manufacturing and assembly requirements for refinery components, many of which rely on custom-forged metal parts. This adds complexity to the supply chain and impacts the agility of North America’s energy response.
In a world marked by unpredictable geopolitical tensions, refining capacity isn’t merely a technical consideration but a linchpin of energy security. For policymakers and industry leaders, maintaining North America’s energy stability requires not only investment in crude transport infrastructure but also a clear focus on refining and processing capabilities. This foresight will be essential to meet the increasing demand for diverse energy products and ensure North America’s position as a stable, reliable energy provider to global markets.
Robert Dimitrieff is chief executive officer of Patriot Forge Co., a metalworking company in Canada. He also serves on the International Economic Policy Council of the C.D. Howe Institute.