High energy prices are rippling across the Canadian economic landscape, with rising inflation and interest rates — and increased oil and gas sector spending.

It’s also fuelling expectations of more exploration and production in the oilpatch in 2027, while Canadian governments push for more export infrastructure to be built, including pipelines and LNG terminals.

On Wednesday, West Texas Intermediate (WTI) crude prices closed at US$102.78 a barrel, up more than $2, as global oil markets remain elevated while the war in the Middle East has continued for eight months.

SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.

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With inflation levels climbing this year, the Bank of Canada responded Wednesday by boosting its policy interest rate for the first time since 2023, increasing it by 25 basis points to 2.5 per cent.

Bank of Canada governor Tiff Macklem said global oil prices are expected to remain “higher for longer,” increasing costs for consumers and many businesses.

“An increase in the policy rate is needed to reduce the risk that elevated energy prices could spill over and become generalized inflation,” he told reporters.

“We are mindful that uncertainty is still elevated.”

According to the Bank of Canada, economic indicators point to Canada’s GDP expanding about two per cent in the third quarter, while inflation is projected to increase to about 3.5 per cent by year’s end.

Consumer spending remains “solid” and business investment is picking up, including from increased activity in the oil and gas........

© Calgary Herald