Oil Ousts Maple Syrup?

As a major oil producer (and uranium and food), Canada stands to benefit from inflation in commodity prices – but the article focuses on the national economy and not all provinces will benefit. Alberta and Manitoba may boom while Ontario and Quebec suffer.

Can Inflation Save Canada from Recession? – Mike Cagges – June 20, 2008 – Seeking Alpha

Canada’s consumer price inflation rose 2.2%……Inflation is up significantly….Earlier this month, Canada announced its gross domestic product (GDP) shrank 0.1% in the first quarter, marking the country’s first decline since the second quarter of 2003.

But this is where inflation could actually be a friend.

In today’s world, where interest rates are low and commodity prices are high, Canada’s in a very strong position for two reasons:

It has oil reserves – somewhat larger than the Middle East – in the form of the Athabasca oil sands.

And it’s the world’s largest producer of uranium, with 25% of the world market. (Australia is a close second, with about 23%.)

Since Canada is a chief oil exporter, its oil companies are on the receiving end of soaring prices. And in turn, that helps pad the economy’s pocket, becoming an unlikely protective barrier to another quarter of negative GDP growth.