In this week’s The Seven…

• Taking a breather - Canada/U.S. central banks on the sidelines
• Pipeline impacts - A collaboration with Studio.Energy
• Land of the Living Skies - Saskatchewan’s economic outlook
• Lace them up - Alberta hosts the World Cup of Hockey
• Next week - ATB’s quarterly Alberta Economic Outlook
• Interesting Facts - Physical economic power and the countries most likely to run of out oil
• Charts of the Week - Canada’s population shrinks, but there’s a regional twist

“We keep on waiting/Waiting on the world to change”

—John Mayer 

The war in Iran continues without a clear end in sight. The Strait of Hormuz remains effectively blocked, and yet surprisingly the WTI oil price was only US$96/bbl as of yesterday’s close. Surprising, given that the thing that many oil analysts have always feared the most (the blocking of the world’s most important oil choke point) has actually happened.

Oil traders are maintaining a sanguine outlook, betting on a combination of early-year oversupply and an eventual de-escalation of military conflict in the Strait. This confidence is visible in the futures market, where WTI for year-end delivery is currently below $80/bbl.  

Without clarity on duration, we will bravely stick out our heads next week with a new economic forecast. We debated waiting until the fog clears, but are now convinced this won’t happen anytime soon.

How will this price shock play out in Alberta? Higher costs, like everywhere else, weighing on consumption. But also higher incomes as a major oil producer. The net impact on real GDP, in our view, is modestly positive. The higher cash flows support oil-patch activity, but won’t translate into a spending boom absent new pipelines or durably high prices.

What’s the Bank of Canada to do? Not much, other than wait for some fog to clear as they did on Wednesday. There’s no way they’ll raise interest rates if prices spike for a few months. But it does become a problem if higher energy prices bleed through the broader basket of goods—like transportation services, food, and clothing.

The big risk is that inflation expectations rise well above 2% and become ‘unanchored’. The Bank will need to lean against that with higher rates. But the Canadian economy is too weak for rate hikes at the moment - Q4 GDP contracted and February jobs fell 84K. With a heavy dose of humility given the global uncertainty, we maintain our baseline view that the BofC will stay on the sidelines this year, before looking to hike next year.

Oil price shock aside, remember this was never going to be an eventful year for the Bank of Canada—it’s other levers that now need to be pulled to juice growth in Canada. For the listening types, here’s my CBC interview on the BoC.

Stateside, it’s a similar story. Chair Jerome Powell held this week, and effectively said no more cuts until it's clear the tariff impact on inflation is petering out and until the impact of the Iran war is better understood.  

Critical minerals are a cornerstone of Saskatchewan’s growth ambitions. In 2023, the province launched their critical minerals strategy under the banner “Securing the Future.”

Saskatchewan holds 27 of Canada’s 34 critical minerals, is the world's leading potash producer, the world's second largest uranium producer and Canada's largest helium producer. By the end of 2026, Saskatchewan is expected to have commercial production of six critical minerals: potash, uranium, helium, copper, zinc and lithium.

Major projects to watch in the province include:

• BCE Inc., the parent company of Bell Canada, is planning to build a 300 megawatt data centre just outside of Regina. Construction is slated to begin this spring, with the first phase expected to go live during the first half of 2027. 
• The Jansen potash project is a BHP-owned $14 billion investment currently underway. Upon completion, it is set to become one of the world’s largest underground potash mines. As of January 2026, Jansen Stage 1 was 75% complete. 
• Denison Mines Corp. has reached its final investment decision on its proposed uranium mine, site preparation and construction are slated to begin this month.
• The SaskPower Small Modular Reactors (SMRs) project is a multi-year plan to develop and deploy SMRs in the province by the mid-2030s.
• Project Aurora is a lithium refining demonstration plant being built by EMP Metals Corp. and Saltworks Technologies Inc. The project aims to produce lithium chloride from brine using direct lithium extraction (DLE) technology.

Alberta to host the World Cup of Hockey

We found out this week that Alberta will co-host the 2028 World Cup of Hockey alongside Prague, Czech Republic. The tournament is scheduled for February 2028, with games in Calgary and Edmonton. This marks a major return for the "best-on-best" international format, which hasn't been held since 2016.

As an avid hockey fan, I'm personally jazzed about this. As an economist, it will provide a meaningful boost to tourism through out-of-province and out-of-country stays. The cost/benefit economics of hosting these events is complicated and hotly debated. No need to debate this now. Today we will celebrate the announcement as a great opportunity, while also acknowledging that some things—like civic/national pride, liveable cities and just pure excitement—can’t be fully measured.

Interesting Fact #1: The digital-physical paradox

In a digital world, what’s the role of a major resource producer like Canada? According to Paul Achleitner, in a guest piece for the Economist magazine, having physical assets is a strategic advantage.

Achleitner argues that the physical inputs required to run the modern ‘digital’ world are becoming scarce and more valuable. Think of the massive amount of energy to run AI data centres, or the critical minerals required to develop advanced semiconductors?

His piece has strong parallels to a book I highly recommend: “Material World: The Six Raw Materials that Shape Modern Civilization,” by Ed Conway. He covers six materials that underpin everyday life—sand, salt, iron, copper, oil and lithium—providing further evidence that economic power can come from the physical realm.

Interesting Fact #2: Countries in danger of running out of oil

The war in Iran has taught us, among many things, that we cannot take energy for granted.  Canadians are facing higher prices, but we’re also in a fortunate spot as a major net oil exporter (though foreign oil is still imported into eastern Canada).

Which countries are most vulnerable to literally running out of oil from prolonged Strait of Hormuz disruptions? According to a recent Forbes article, it’s the oil-importing nations of Myanmar, Vietnam, Philippines, Singapore, and Taiwan. Less vulnerable, but also at risk, are South Korea, India, Indonesia, Japan and China.

The article covers Asian countries relying on Middle East shipments, but it’s worth noting that Cuba is currently facing blackouts because the U.S. has blocked shipments of Venezuelan oil used to power the grid.

Charts of the Week: Canada’s population shrinks, but there’s a regional twist

It’s official. Canada saw its first year-over-year population decline on record in the final quarter of 2025, dating all the way back to 1947.

The big swing has come from declines in the non-permanent resident (NPR) population, along with a slowdown in permanent resident admissions. Natural increase (births minus deaths) was marginally positive for the year, but in the fourth quarter was negative for the first time on record outside the pandemic period.  

As for Alberta, its population is slowing, but still growing. For the second straight quarter, Alberta was the only province to record a quarterly population gain.

What’s going on in Alberta? It’s partly due to smaller NPR outflows, but the more persistent driver has been interprovincial migration. While slowing, it has been a net positive for 18 consecutive quarters. That’s closing in on the 19 quarter streak of the 2010-2015 period, which was long, but not the longest on record (see trivia). But unlike then, this time around it hasn’t been driven by an energy boom.

Alberta has its own challenges, but recall that interprovincial migration is a relative game. The migration data tell us that Canadians, on average, still feel their prospects are better in Alberta than elsewhere.

Relative housing affordability is playing a role, but so is a stronger job market. Could it also be linked to the “physical realm” story above (interesting fact #1)?

Answer to the previous trivia question: According to the The GDP Payoff of Additional Oil Pipeline Capacity report, the impact on Canada’s real GDP will peak at $39.7 billion in 2033, representing a 1.4% increase over the baseline.

Today’s trivia question: Alberta’s latest streak of positive interprovincial migrant inflow is long, but not close to the longest on record. Over what time period did Alberta record the longest quarterly streak of positive net interprovincial inflow of migrants (dating back to 1961)?