The conventional wisdom is that the Canadian economy should be a big winner from the surge in oil prices following the escalation of conflict in the Middle East. Canada is the fourth-largest exporter of crude oil in the world: when prices rise, Canadian oil generates more revenue, corporate income, higher wages, and government royalties.
The OECD’s latest outlook points to a more complicated reality. Canada is no longer a petrostate; while the oil and gas sector is still large enough to cushion Canada from the worst macroeconomic consequences of the Iran war, the structure and geography of Canadian economic growth have added many more trade-offs to managing resource profits.
