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Canada can act to mitigate another repeat of 1973, 1979, and 2022 in the future, if it takes energy strategy seriously.
By Geoff Russ
Cars lined up in 1973 to buy scarce and expensive gas during the first Oil Shock of 1973. (AP Photo/Marty Lederhandler, File)
Canadians have seen this movie before, and they should not take much comfort from the updated special effects.
The war around Iran and the effective closure of the Strait of Hormuz are sending a familiar signal through the global economy. The picture promises higher fuel costs, tighter supply and the return of energy insecurity as a first-order political problem. The chokepoint carries about 20 million barrels of oil a day, roughly one-fifth of global supply, while close to 93 per cent of Qatar’s LNG exports also pass through it. Alternative export routes in the region are limited.
That is why the International Energy Agency is warning that the world faces an energy shock worse than the oil crises of 1973 and 1979 combined with the gas fallout from Russia’s 2022 invasion of Ukraine. He said global oil supplies had been cut by about 11 million barrels a day, LNG supplies by about 140 billion cubic metres, and at least 40 energy facilities in nine countries had been severely damaged.
The price of complacency
The price effects are already visible. In the United States, average gasoline prices climbed to US$3.84 a gallon, up 31 per cent from a month earlier. The U.S. Energy Information Administration now projects average gasoline prices of about US$3.34 a gallon in 2026 and US$3.18 in 2027, a sharp revision from its February outlook, and does not expect prices to fall below US$3 before the end of 2027. In Canada, average gasoline prices reached about $1.68 a litre, up from $1.29 a month earlier, while crude has risen above US$100 a barrel.
The New York Times reported that the 1973 embargo threatened about seven per cent of global oil consumption. Today, experts cited in that report say close to 20 per cent of world supply is at risk. In 1973, panic buying, rationing schemes and political missteps worsened the pain. In 1979, Ottawa even prepared gasoline rationing stamps worth 50 litres each, though they were never issued.
That history should sharpen Canada’s thinking. The country has spent years behaving as though energy abundance were enough, as though resources in the ground could substitute for strategy. They cannot.
Canada’s structural advantages
Canada missed much of the first LNG buildout while capital flowed south, which has been attributed to regulatory uncertainty and permitting delays. Only one major project, LNG Canada, is now operating from that first wave.
Yet the case for doing more has rarely been clearer. TC Energy CEO François Poirier believes the Iran war makes a second phase of LNG Canada more likely, because Asian buyers now better understand the value of supply that reaches the Pacific directly, without passing through Hormuz. LNG Canada Phase 1 will export 14 million tonnes a year when fully ramped up, and a second phase would double that.
Canada also retains obvious structural advantages. Kitimat-to-Japan shipping takes about 10 days, compared with roughly 25 days from the U.S. Gulf Coast. Canada’s value is in its resource base, as well as its political stability and delivery security. Buyers in markets like Asia are looking for supply that is not exposed to missiles, blockades or regime instability.
Learning from Europe’s scramble
Europe’s scramble since Russia’s invasion should have taught the same lesson. Europe added 53.5 billion cubic metres of LNG import capacity after 2022 and still ended 2023 importing 14.8 per cent of its gas supply from Russia. Security, affordability and supply cannot be improvised in a crisis.
Canada cannot undo years of drift overnight. But this shock is another reminder that an energy strategy requires building export capacity, reducing regulatory paralysis and treating reliable supply, correctly, as a national advantage. The 1970s taught that oil shocks punish complacency. This one should teach Canada not to waste its second chance.
Geoff Russ is a writer for Resource Works, a non-partisan organization that champions responsible resource development in British Columbia and Canada. Reach Geoff at [email protected].
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