Bank of Canada Governor Tiff Macklem spelled out the dual impacts of soaring oil prices for the national economy at the central bank\u2019s meeting on Wednesday, explaining that pricier barrels of crude linked to the war in the Middle East are hitting businesses and consumers at the fuel pumps, while padding the coffers of commodity producers.<\/p>\n
According to new analysis, Canada could lift its \u201cstruggling\u201d gross domestic product by $31.4 billion per year over the next decade by boosting oil export infrastructure by about one-third, or 1.5 million barrels per day. The joint study by Studio.Energy and ATB Financial’s economics team published on Wednesday says this would translate to a 1.1 per cent increase in Canada\u2019s real GDP, and create 112,000 jobs over 10 years.<\/p>\n
The latest GDP reading from Statistics Canada shows the economy shrank at an annualized rate of 0.6 per cent in the final quarter of 2025<\/a>. The national data agency says Canada\u2019s GDP increased 1.7 per cent last year, the slowest pace of growth since 2020.<\/p>\n \u201cGDP growth does not happen by aspiration alone; it will require export infrastructure, production growth and the confidence to build,\u201d Peter Tertzakian, founder and CEO of Studio.Energy, stated in a news release accompanying the report.<\/p>\n \u201cNew energy infrastructure doesn’t yield just a marginal gain for Canada’s economy \u2014 it’s a structural shift that will pay ongoing export dividends,” added ATB chief economist Mark Parsons.<\/p>\n \u201cExpanding our export capacity would fundamentally improve our national economic health and global standing at a time when Canada needs it most.\u201d<\/p>\n The soaring price of oil, and how this will reverberate through Canada\u2019s economy, was a major topic of discussion at Wednesday\u2019s central bank rate announcement. The Bank of Canada held its policy rate in place for a third consecutive meeting<\/a>, as volatile commodities muddied an already uncertain economic outlook. <\/p>\n Meanwhile, tanker traffic through the Strait of Hormuz, which links the Persian Gulf to Gulf of Oman and the Arabian Sea, remains at a standstill<\/a>. The passageway is estimated to handle about a quarter of global oil supply, and is considered the world\u2019s most important chokepoint for fossil fuel energy.<\/p>\n \u201cIt’s still too early to assess the impact of the war on growth in Canada. If higher oil prices are maintained, this will boost incomes from our energy exports,\u201d Macklem told reporters in Ottawa on Wednesday. \u201cAt the same time, higher oil prices squeeze consumers, leaving them with less income for everything else.\u201d<\/p>\n From Keystone XL to Energy East and Northern Gateway, Canada has a long history of oil pipeline plans that failed to break ground. Trans Mountain, South Bow (SOBO.TO<\/a>) (SOBO<\/a>), and Enbridge (ENB.TO<\/a>)(ENB<\/a>) are currently evaluating oil pipeline expansion projects.<\/p>\n Prime Minister Mark Carney has pledged to streamline the approval process for new energy infrastructure. The federal government\u2019s Major Projects Office was established last August. Its \u201cone project, one review\u201d mandate aims to shrink approval time to a maximum of two years.<\/p>\n On Wednesday, TC Energy (TRP.TO<\/a>)(TRP<\/a>) CEO Fran\u00e7ois Poirier urged Ottawa to pick up the pace. The Calgary-based company\u2019s natural gas distribution network spans Canada, the U.S., and Mexico.<\/p>\n \u201cWe\u2019re competing for international customers to deliver them LNG. We want to diversify beyond the U.S.,\u201d Poirier said in an interview with Bloomberg News.<\/p>\n \u201cWe don\u2019t get to pick the timelines.\u201d<\/p>\n Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist<\/a>.<\/p>\n