Needless to say, the persistent and evolving global health circumstances over the course of the last two years has had an unprecedented impact on economic indicators from productivity at the most local level to the disruption of global supply chains and trade as a whole. Even across the G7, the levels of logistic sophistication and bureaucratic involvement in the management of the COVID-19 pandemic differ so significantly that the world’s most developed economies have still not stabilized two years after the virus’s introduction. While the Canadian government has by no means demonstrated a perfect management of the pandemic or the economic challenges that have come with it, public and private actors across the country have been steadfast in offering ambitious and innovative approaches to charting the way forward.
Despite conglomerating the world largest and most advanced economies, the G7 nations still face a plethora of economic challenges, and those exacerbated by the global pandemic will inevitably persist for significant years to come. While these challenges create a degree of uncertainty, their presence offers an opportunity for the world’s most consequential policymakers and innovators to come together and implement new strategies and practices to not only overcome the current economic obstacles, but to usher in a new era of productive, targeted, and sustainable growth while optimizing the output of each working unit and protecting democratic and free-market principles.
In the wake of the pandemic and fiscal measures that have been taken in response, some of the most potent issues facing the world’s largest economies are those of economic inequality, inability of suppliers to meet demand, and inflation. Still, the presence of transcendent issues like climate change, food and water security, and general economic inefficiency continue to pose obstacles to global economic growth.
While it is important for major economies to have rigid free-market foundations that reward productivity and innovation without propping up lagging and outdated firms, an established social safety net is necessary to ensure that businesses and individuals are supported in unforeseen times of crisis. That is an area where Canada has particularly excelled both at the domestic level and through international development. At the most dire of times with the outbreak of the COVID-19 pandemic in 2020, the federal government moved swiftly to evaluate and target vulnerable communities at the ground level with the financial resources necessary to weather their struggles at the time. While the approach has shown to be heavy handed and potentially excessive in magnitude, the fundamental prospect of supporting the most vulnerable is a trait so deeply engrained in Canadian society, that all political parties, with popular public support, were able to pass legislation implementing financial supports targeted for vulnerable communities.
Moreover, supply chain management and growth has been a far more perplexing issue convoluted by a variety of influential factors ranging from oil and gas prices, international trade and travel restrictions, to the changing nature of demand during a pandemic. Because globally integrated supply chains rely on mass-transport capacity, the stability of oil and gas markets are fundamental to their maintenance and growth. Famously, the past few years have had enormously polarizing impacts on the energy market, at one point dropping the price of oil below zero, and at other points showing indications of historic growth.
As countries around the world look set to hasten their economic recoveries, those with natural resource abundance will be taking advantage of recovering markets through increased extraction and industrial development. That includes Canada. Given the current federal administration’s fierce opposition to resource extraction, the reality that natural resources are perhaps the only way to effectively rebound in the short run re-emphasizes the critical role that natural resources play for the Canadian economy now and in the future. Despite the fact that the Prime Minister and Ministers of Natural Resources and the Environment have been described as radical environmentalists due to their overt opposition to any significant resource development, the levers of market capitalism will nonetheless spell victory for resource developers and by extension, for the Canadian economy.
With the International Energy Agency already reporting that Canadian oil production is set to reach a record level of 5.87 million bpd on average, producers are lining up to accommodate a projected global increase in demand of 3.3 million bpd. This is especially welcome news as some experts fear that with current supply levels, gas prices in Canada could reach $1.65 per litre.
An influx of oil and gas extraction in Canada will not only help replenish the energy deficit that has been widening around the world, but it will also re-engage supply chain efficiency and combat rising inflation imposed by the federal government’s spending spree in combination with its numerous attempt to shutter Canada’s oil and gas industry. As global oil and gas trade networks have already experienced significant strain, particularly the export capacity of the United States, oil and gas producers around the globe are gearing up for record production this year to make up the difference. Until the increased production in mobilized on an international scale, low supply will continue to prop up gas prices resulting in an overarching inflationary trend.
On the national level, inflation has already been mounting over the last year and while the Bank of Canada says that the phenomenon is “transitory but not short-lived”, it is time that Canada’s big oil and gas producers step up to fill the leadership void the federal government has left. Canadians’ pocketbooks are not bottomless cash reservoirs, and until the federal government accepts that fact, Canada’s resource industries will have to show the leadership the government is lacking and swing the tides of financial struggle without Ottawa’s cooperation.