The Twenty-Four
The Seven, October 23, 2026
On the ground
By Mark Parsons 23 October 2026 8 min read
In this week’s The Seven…
- Mixed bag - Crop production and costs
- Minor relief - A small break for the beleaguered lumber industry
- On fumes - The Canadian consumer
- Oil price differential widens - But not for the reasons you think
- Next week - Bank of Canada decision not a slam dunk
- Interesting Fact: Camrose, Alberta and its unique demographics
- Chart of the week: Bad vibes
“Three dollars and change at the pump
Cost of livin's high and goin' up”
—Ronnie Dunn, Cost of Livin’
You’ve heard the macro story from us: the Alberta economy is growing faster than most provinces, aided by a lower U.S. tariff burden than other provinces, higher oil prices and new market access for energy, and faster population growth in Alberta.
But that only tells us so much. To get closer to the ground level, we launched a small business pulse survey, talked to a local bakery (Big Buns Club), and interviewed Blair Berdusco representing Alberta craft breweries during Small Business Week.
These discussions paint a more nuanced micro picture. Businesses told us that rising costs and constant geopolitical noise are creating pressure. This jives with other household surveys that rank cost of living as the top issue - reinforced by our Chart of the Week.
It also depends on who you are. Tariffs are, for example, hurting honey producers and breweries, while surging diesel costs are crimping farm incomes. In the energy sector, the fall ATB Cormark Capital Markets survey shows new optimism that pipeline projects will proceed—but also a ‘wait and see’ disciplined approach to growth.
The referendum was the big news this week. It doesn’t change our forecast, which was already based on status quo stay in Canada assumptions. But it does clear much of the uncertainty businesses said was holding things back. In an Alberta Chambers of Commerce survey taken just prior to referendum day, 44% of Alberta businesses reported that the discourse around separation was impacting their business, with almost all (96%) saying the impact was negative.
Next week we turn our attention to the Bank of Canada’s rate decision—a close call to say the least.
Mixed bag - Agriculture producers see decent yields, but much higher costs
Agriculture is always tricky to report on, as I’ve discovered when I visit communities across the province. Crop conditions vary from region to region, and it depends what you’re growing and selling.
In broad strokes, the latest Statistics Canada modelling suggests that three major crops (barley, canola, and wheat) will see higher production than the 5-year average, though not as good as last year’s bumper crop.
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Canola is holding up relatively well. A key factor is increased domestic crushing capacity and demand for biofuels, which has encouraged farmers to increase acreage for canola. A few examples: Cargill’s new crush facility in Regina, Louis Dreyfus’ expansion in Yorkton, and Imperial Oil’s renewable diesel complex. Canola producers are also benefiting from the reduction in Chinese tariffs, with exports to China rebounding sharply since the Canada-China deal in March.
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Alberta crops saw above-average precipitation this growing season—especially in some regions like northeastern Alberta. Wetter conditions delayed harvesting of certain crops, with harvest 87.5% complete as of October 13 vs. the five-year average of 97.5% according to the latest provincial crop report.
A major challenge for producers has been input costs, primarily diesel and fertilizer following the Strait of Hormuz disruptions. Western Canada is self-sufficient in nitrogen fertilizer with major facilities in Alberta and Saskatchewan, but still impacted by changes in global prices.
As for diesel prices, they have shot up to record levels—reflecting the impact of higher oil prices and refinery disruptions. Trump's easing of Russia sanctions has done little to ease diesel prices so far. Statistics Canada reports that Alberta farm input costs rose 15% year-over-year in the second quarter—expect to see another big gain in Q3.
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Minor tariff relief - but softwood lumber producers remain under pressure
As we’ve previously discussed, Canadian lumber producers have been a major casualty in the trade war.
In this sector, you’ll take any win you can get—and this week there was a small victory. The U.S. Department of Commerce cut the duties on Canadian softwood lumber imports from about 35.16% to 24.75%.
But the sector is not out of the woods –far from it. Total duties are still a punishing 34.75% because of a separate Section 232 10% tariff imposed by the Trump Administration.
Canada’s lumber industry has been under pressure in recent years, reflecting softwood lumber duties, tough market conditions, fiber shortages, pine beetles and fires. Recent mill closures include West Fraser’s 100 Mile House in B.C., and Canfor’s Fox Creek facility in Alberta.
It’s not just Canadians—U.S. homebuilders are also protesting these duties and tariffs. They have been lobbying to eliminate duties to ease building costs given the deterioration in U.S. affordability.
Running on fumes - Canadian consumers
How much more does the Canadian consumer have left in the tank?
Economists are pointing to consumer resiliency in light of today’s retail sales report—a sizable 1.2% uptick in August and the advance reading of +0.7% for September. Compared to August 2025, sales are up a healthy 5.4% in Canada and 7.6% in Alberta.
Positive news, but I’m taking a more cautious stance. Much of the increase is fuelled by higher gasoline station sales, reflecting higher prices. Going forward, it will be harder for Canadian consumers to carry the economy amid slowing population growth, rising interest rates, and weak job growth. Stronger equity markets have also provided a tailwind, but that also makes the consumer more vulnerable to a potential correction in financial markets.
This is yet another reason why more growth in Canada needs to come from business investment, as I’ve previously discussed.
Interesting Fact: The unique demographics of Camrose, Alberta
My journeys took me to Camrose, Alberta this week to speak at an annual chamber event. This city of just over 20,000 is a hub for agriculture and agri-food processing. The Cargill canola crushing plant in Camrose started operations in 2015.
A few interesting demographic facts about Camrose:
- It’s a popular retirement community, with the share of 65+ in Camrose and county at 24% in 2026, versus the Alberta average of 16%.
- There are more women than men. According to the 2021 census, women comprise 52.1% of the population in the City of Camrose, compared to a near identical 50-50 split for Alberta as a whole. Age plays a role, with women on average living longer than men. As shown in the chart, there are noticeably more women than men in the 70+ age group.
- According to Alberta Treasury Board and Finance’s projections, Camrose and the county’s population is expected to grow 0.8% ayear between 2026 and 2050 - slower than the 1.3% provincial growth, but still impressive given its older population.
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What’s different about today’s (oil price) differential
The price discount on Canadian heavy crude (Western Canada Select) has widened significantly in recent weeks, hitting $28/bbl relative to West Texas Intermediate as of Thursday close.
As Patrick O’Rourke from ATB Cormark Capital Markets explains, it’s the combination of massive increases in shipping costs following the Hormuz blockage, a shortage of diesel that has increased demand of U.S. refineries’ for lighter crudes, and increased production from Venezuela competing with Canadian heavy at the Gulf Coast.
In the past, the light-heavy differential has blown out due to insufficient pipeline capacity, forcing producers to accept massive discounts (around $50/bbl at one point in 2018) on Canadian heavy. While the TMX is near capacity, this is not the main driver this time around.
Brief backgrounder: The price of heavy crude in Alberta is lower than the North American (West Texas Intermediate) benchmark you hear quoted in the news. There are two main reasons:
1) Quality: oil sands crude is a heavier, higher sulphur crude.
2) Transportation: it costs more to ship heavy oil to refineries located in other markets to convert into a wide range of products.
Without sufficient pipeline capacity, the discount widens, and becomes much more volatile—hurting producers, governments and the Canadian economy in general.
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Next week - BofC tough to call
In forecasting, there are low and high conviction calls. I’m calling my forecast for a ‘hawkish hold’ next week—that is, holding at 2.25% but with strong language that inflation is running too high—a low conviction call.
The C.D. Howe Institute Monetary Policy Council is also calling for a hold.
Yet the debate rages on the floors of ATB. The market has priced in a hike, and Governor Macklem is sounding more hawkish. Some of my colleagues are more convinced that the Bank might move now.
My view: Inflation risks have increased, but core readings are still well behaved and the economy is too fragile. We’ve long maintained that the next move is a hike, but we think the Bank can wait a little longer.
I’ll discuss this with Mark Johnson, head of the rates desk at ATB Cormark Capital Markets later today in a Bank of Canada preview. Stay tuned!
Chart of the Week: Bad vibes
I’m of the view that you can explain many feelings in a chart. So here it is—my bad vibes chart.
It shows what would have happened if inflation rose 2%/year since early 2021. It then shows what actually happened.
The area between the lines is what I call bad vibes (my technical term). The feeling that life is expensive, as confirmed by the latest Abacus survey data that puts the cost of living as the top issue among Canadians. You can replicate this chart for any province, including Alberta, and it more or less looks the same.
For the Bank of Canada, they won’t be helping us get better vibes through rate cuts. Let’s hope that Canadian efforts to build more and faster do the trick—by gearing up the economy and creating jobs.
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Answer to the previous trivia question: Mrs. Kwong Lee became the first Chinese woman to immigrate to Canada when she arrived in 1860.
Today’s trivia question: When did Elizabeth II become Queen of the United Kingdom and Northern Ireland?