Drill, Baby, Drill... in Canada? How Trump’s Plan Could Backfire Up North
As U.S. shale enters its twilight, Canada's oil reserves emerge as a prime investment opportunity for American energy giants.
Editorial Team (ET)May 9, 2025
Donald Trump’s energy policy has always been clear—maximize domestic production, reduce reliance on foreign oil, and keep fuel prices low for American consumers. But as his administration pushes a renewed “drill, baby, drill” agenda, a harsh reality is settling in: U.S. shale oil production is approaching a plateau.
Industry experts, including Eric Nuttall of Ninepoint Partners, warn that America’s once-booming shale fields are running out of prime inventory. The country’s ability to sustain growth in oil output is fading, and U.S. companies are starting to look elsewhere. Canada, with its vast reserves and decades-long production runway, may become the natural beneficiary of this shift.
U.S. Shale in Decline, Canada’s Oil Sector Gains Appeal
For years, U.S. shale producers dominated global oil markets, revolutionizing the industry with hydraulic fracturing and horizontal drilling. But the best drilling locations—what the industry calls Tier-1 inventory—are drying up fast. Pioneer Natural Resources co-founder Scott Sheffield recently acknowledged that even major players like ExxonMobil, which acquired Pioneer for $60 billion, will exhaust their top-tier drilling sites within a few years.
The U.S. Energy Information Administration (EIA) projects that American oil output will increase slightly in 2025, reaching 13.5 million barrels per day. But the era of exponential shale growth is over. Wells are yielding less, break-even prices are climbing, and investors are hesitant to fund expensive new projects.
In contrast, Canada’s oil industry offers long-term stability. Companies such as Canadian Natural Resources, MEG Energy, Tamarack Valley Energy, and ARC Resources have decades of untapped inventory. Unlike shale wells, which see rapid decline rates, Canadian oil sands operations provide consistent output for decades.
Investment Opportunities in Canadian Oil and Gas
With U.S. shale’s best days behind it, American energy investors are eyeing Canada. The Toronto Stock Exchange is home to oil and gas producers trading at significant discounts compared to their American counterparts.
Nuttall argues that Canada presents a “massive opportunity” in both oil and natural gas, as public entities remain undervalued. His Ninepoint Energy Fund, which is heavily weighted toward Canadian companies, has outperformed as investors recognize the country’s long-term resource potential.
Beyond financial incentives, Canada’s regulatory environment is also more accommodating. While the U.S. faces increasing opposition to drilling, pipeline projects, and refinery expansions, Canada has taken a more pragmatic approach to resource development. Alberta, in particular, remains one of the world’s most politically stable oil-producing regions.
The Role of Tariffs and Energy Trade Policy
One major hurdle to increased U.S. investment in Canada’s energy sector is Trump’s existing 10% tariff on Canadian energy imports. This protectionist measure was introduced to prioritize domestic production, but it may soon become counterproductive.
As U.S. shale declines, American refiners and consumers will need alternative sources of crude. Canadian oil, already a staple of U.S. imports, could become even more critical. Trump’s administration may be forced to reconsider tariffs and trade restrictions to ensure stable supply chains and prevent domestic fuel price spikes.
A Shift in North American Energy Dynamics
Trump’s aggressive energy policy was designed to reassert American dominance in oil production. Ironically, it may end up driving U.S. investment north of the border. With Canadian oil companies holding vast reserves and trading at discounts, they represent an attractive opportunity for capital seeking long-term security.
For investors watching the energy sector, the message is clear: the U.S. shale boom is fading, and Canada’s oil and gas industry is poised for a resurgence. The coming years could mark a pivotal shift in North American energy dynamics—one where Canadian producers play a more significant role in fueling the U.S. economy.
