In this week’s The Seven…

• Double the output - LNG Canada Phase 2 to proceed 
• In the national interest - West Coast Pipeline one step closer
• Northern Shield - Doug Ford pledges Ontario dollars
• Partial steam ahead - High-speed rail in Alberta gets a leg up
• Some relief at the pump - Alberta removes gas tax
• Next week - September jobs report
• Interesting Fact: PhD graduates
• Chart of the Week: Diesel drama

It has been a week of important economic announcements. From LNG Canada reaching a final investment decision on doubling the capacity of its facility to the federal government officially designating a new oil pipeline to the B.C. coast to be in the national interest, building big stuff is back on the agenda in a big way.

In the meantime, Ontario Premier Doug Ford said his government would be willing to use taxpayer dollars to support the construction of a pipeline from Alberta to Ontario and Premier Smith announced Alberta is planning to submit a proposal to the federal Major Projects Office that would see a high-speed rail line built between Calgary and Edmonton.

With the exception of LNG Canada Phase 2, the completion of these projects is far from certain, but they are no longer easily dismissed by the mantra “we can’t build big things in Canada anymore,” which was the case not that long ago. Any one of them, moreover, represents major economic upside for the country and for Alberta, in particular.

Now we wait to see if shovels actually hit the ground.

Twice as nice - LNG Canada’s new facility will double LNG production

On Tuesday, LNG Canada announced it has taken a final investment decision (FID) to move forward with its Phase 2 expansion project. Expected to be operational early in the 2030s, the project will add two additional LNG processing trains within LNG Canada’s existing facility in Kitimat, B.C., doubling total production capacity to 28 million tonnes per annum (mtpa) from 14 mtpa.

Canada was late to the LNG export game when LNG Canada Phase 1 finally opened last year, but with demand for reliable Canadian energy on the rise, and more export capacity in the works, it is becoming a key player.

The North American market is well supplied, and we are not expecting the price of Alberta gas to skyrocket. But over time, with expanding LNG capacity and data centre demand, our latest forecast points to a gradual improvement in Alberta natural gas prices over the medium term.

In the national interest - “Pacific Link” passes a key milestone

We covered this in some detail yesterday, but the potential size of the economic lift from the proposed oil pipeline to the B.C. coast warrants noting again that the project—now called Pacific Link—was officially deemed to be in the national interest under the federal Building Canada Act.

This is not a federal approval of the project, but rather, a commitment to fast-track the project through the approval process. The idea is to have a “conditions document” (including the required federal permits) in place by September 1, 2027. A key component of this process will be meeting the duty to consult with Indigenous Peoples. Also key, is a final investment decision by the Oil Sands Alliance to proceed with the Pathways carbon capture project (which the federal government has already made a condition of the pipeline project). Keep an eye on this, as it is the single largest upside to our Alberta forecast (our baseline forecast does not include either the Pacific Link or Pathways project).

Going in the other direction - Northern Shield

The effort to get another oil pipeline from Alberta to B.C. built has grabbed most of the attention recently, but the idea of sending more oil east has also moved from the “never gonna happen” pile to the “maybe it could happen” pile.

Dubbed the Northern Shield Energy Corridor, the proposal would see a new oil pipeline built connecting Alberta’s oil to Ontario’s refineries with the entire route located within Canada. This is seen as an advantage, from a national energy security perspective, over the Enbridge system which cuts south into the U.S. before reaching Ontario. Because the Enbridge system crosses several states, it has been subject to U.S. legal and environmental opposition, including efforts to have it shut down by the Governor of Michigan. If built, the new pipe would add between 500,000 and 800,000 barrels per day of capacity and potentially include a line up to the Port of Churchill.

New pipe heading east is not a new idea—the proposed Energy East project was cancelled in 2017—but the degree of political support and the importance of secure supply may have changed enough that this new proposal could become a reality. Again, in keeping with our approach of waiting until decisions are finalized, it’s not in our forecast.

Partial steam ahead - High-speed rail in Alberta gets a leg up

In other economic infrastructure news, plans for a high-speed rail project between Calgary and Edmonton—capable of going speeds up to 320 km/h—are moving forward. The Alberta government will soon issue a formal request for private companies to submit proposals, with a proponent expected to be selected by April 2027. Once a proponent has been selected, Premier Danielle Smith indicated that Ottawa has agreed to refer the project to its Major Projects Office.

Some relief at the pump - Alberta’s provincial gas tax removed

On October 1, the Government of Alberta suspended its 13 cent per litre gasoline and diesel tax through to the end of 2026 to help relieve high living costs stemming from elevated global energy prices. This complements the federal government’s pause of its 10 cent per litre tax on gasoline (4 cents per litre on diesel) that is scheduled to run through January. These measures will not fully offset the impacts of higher market-driven oil and gas prices—which could rise even higher if the situation in the Middle East gets even worse—but they will keep them lower than they would be if the taxes were still in place.

Next week - Jobs in September

On Friday, Statistics Canada will release the results of the Labour Force Survey for September. Our expectation is for modest job growth in both Canada and Alberta, held back by the U.S. Section 338 tariffs that took effect on August 22 and the ongoing slowdown in population growth.

Interesting Fact: PhD graduates

The latest numbers from Statistics Canada on postsecondary graduates show that 8,928 students at Canadian institutions graduated with a PhD in 2024—the highest number since at least 1992 when the data series began. This works out to about 22 PhD grads per 100,000 residents that year. In Alberta, there were 852 PhD grads in 2024 or about 17 per 100,000 residents.

Chart of the Week: Diesel drama

Ever since gas prices (including diesel) spiked after the U.S. and Israel attacked Iran at the end of February, our concern has been that higher transportation costs will spill over into other prices (like groceries). This is what’s keeping the Bank of Canada up at night as it would need to lean against that with higher interest rates. So far, we haven’t seen this happen in a dramatic way, but some pass through is inevitable. Diesel prices, which is what most trucks transporting goods and farm equipment run on, have reached record levels in Canada and around the world.
As our Chart of the Week shows, a litre of retail diesel averaged $2.57 in September, setting an all-time high. Diesel prices tend to go up in the winter months, so even higher prices might be on the way.

The main culprit for the jump in prices this year is the supply disruption in the Middle East brought on by the war with Iran. Other factors have, however, been adding to the supply crunch, including damage to Russian refineries. Prices are so high in the U.S., President Trump has even mentioned banning U.S. diesel exports.