As we watch oil prices climb in the wake of Russia’s invasion of Ukraine and the subsequent retaliatory moves that will restrict global supplies, there is one response that has noticeably absent — the Canadian dollar has not gone up on rising oil prices.
There was a time when we called the Canuck Buck a petro-dollar in that it generally tracked oil prices up and down.
That had a noticeable calming effect on the Canadian economy. It provided a buffer against inflation, for example.
But the linkage may be substantially reduced, if not gone altogether based on its movements in recent weeks. As oil moved from $50 a barrel to more than $120 this week, the Canadian dollar has pretty remained unchanged.
So we’re getting higher revenues but our purchasing power is not rising, something that brings inflation along with it.
Canada’s public policy is, in large measure, out of step with global realities. At a time – even before the Russian invasion – demand for oil was rising all over the world, we were looking for ways to demonize or suppress the petroleum industry and now we are paying for that posture.
