Why Canada's oilpatch can't solve the energy crisis

After meeting with his global counterparts in Paris this week, Canada's natural resources minister pledged to pump out more oil and gas to alleviate the energy crisis in Europe.

Oil and natural gas are in short supply in parts of the world after many countries sanctioned Russia following its invasion of Ukraine.

The Canadian industry wants to increase production, but there are questions about how much extra oil and natural gas can be pulled from the ground and what impact it could have on the world, especially considering oil production in Western Canada is already near record levels.

Jonathan Wilkinson announced Thursday that Canada's industry is expected to increase oil production by 200,000 barrels per day, and the equivalent of 100,000 barrels of natural gas per day, by the end of the year. 

Currently, Canada produces about 4.7 million barrels per day of oil, and exports about four million barrels per day.

Commodity prices have spiked in the last month as Russia's exports, from oil to coal, have fallen. It's why gasoline prices hit record levels in Canada this month.

Europe is the biggest customer for Russia's oil and natural gas. That dependance is why European countries are having a difficult time following in the footsteps of Canada and the U.S., which both banned imports of Russian oil and gas.

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"We have our European allies who are facing the prospect of not being able to heat their homes or fill up their trucks to actually service their grocery stores and their restaurants. It would be incredibly irresponsible for Canada to say 'we don't care,'" Wilkinson told reporters on Thursday.

Last year, Russia was exporting about 4.6 million barrels per day of crude oil, according to energy consultancy group Wood Mackenzie. Those exports have fallen because of the widespread economic and energy-focused sanctions against the country.

If Canada can boost its own oil output by 200,000 barrels per day, that in itself won't have much of an impact on offsetting those Russian barrels. If anything, it could help the United States, which is looking to replace about 500,000 barrels of petroleum that it was importing from Russia.

"Canada on its own is not going to solve the issue," said Wilkinson. "But Canada coming forward in conjunction with Brazil, in conjunction with the United States, and I'm sure there will be others, will help us to remove some of the tightness in the market."

While many Canadian companies say they want to help by increasing production, there are also some critics who say the federal government hasn't been supportive enough of the oilpatch, in terms of pipeline regulations and a proposed cap on emissions, among other policies.

"It's a temporary respite to the negative approach the federal government has taken toward energy development," said Robert Cooper, with the institutional sales and trading team at Calgary-based investment firm Acumen Capital Partners.