Canada’s economy is on the verge of collapse - we need to nationalize our oil

|Subreddit: r/economics|Post title: Canada’s economy is on the verge of collapse - we need to nationalize our oil|Post body: Yesterday, the Bank of Canada increased interest rates for the 10th time in 1.5 years. We are at 5% now, which is the highest interest rate in 20 years, and the bank has indicated that there are more increases to come.<br><br>The interest rate increase has led to a sharp increase in mortgage rates. We went from 3-4% for a 5 year fixed mortgage to around 6% today.<br><br>Canada’s economy is in shambles. We have the worst inflation crisis in the G7, and the worst productivity growth in the G7. Our healthcare system is also imploding. <br><br>I think increased interest rates are partly to blame for the current economic situation. But the other half of the problem is the specific context of Canada. Yesterday, the CEO of the Royal Bank of Canada said that Canada has a serious lack of investment in housing and that the construction rate is lower than population growth, so we can’t keep up with demand for housing. I also doubt that interest rates will result in a lot of housing inventory hitting the market, because one of the reasons people buy houses is to escape renting. If interest rates go up, I imagine that a lot of people will choose to just continue to rent and won’t sell their houses. So I’m not sure that increased interest rates will bring housing prices down, even if it slows down the rate of appreciation.<br><br>I want to propose that the real root cause of Canada’s economic problems is the fact that oil profits are being syphoned out of Canada by multinational oil corporations. Every Canadian knows that whenever the government wants to build anything there is a lot of delay and cost overruns and the project ends up costing 5-10x what the initial estimate was. We can’t even build an electrical grid to connect to our major cities.<br><br>Meanwhile all the oil in Alberta is extracted by multinational corporations that are controlled by oil tycoons in Qatar, China and Saudi Arabia. This is a huge problem because Alberta has all the oil and gas, while the rest of the country has most of the population. If you think about it, it’s exactly the same as the relationship between energy importers (Europe, China) and energy exporters (Russia, Qatar). Whenever oil prices are high, oil exporters get rich and oil importers get poor.<br><br>I think that this logic applies to Canada too. The oil profits are syphoned out of our province/country and into the pockets of shareholders and oil tycoons in other countries. This is why the Canadian dollar has been weak for the past 10-15 years. We’ve even seen $0.68 as our CAD/USD exchange rate in the past year. To build an economy, you need capital, and if all your capital is being extracted out of the economy by oil tycoons, then you can’t invest in the economy. And then when oil prices are high, the cost of living is high due to the high oil price, and then the rest of the economy suffers from high costs.<br><br>Because Canada’s economy is a mess, we are now forced to increase interest rates, which is causing housing prices to rise even more. <br><br>So I propose the following solution. Nationalize the oil industry in Alberta, just like Norway did in the 1970s. All the oil belongs to the government, which is the representative of the people. The government should extract the oil, and sell it on the market and use the profit to directly lower the cost of living in Canada by subsidizing the economy. Subsidize the price of gasoline/transportation for all the industries, so that they can access cheap energy and feedstock for their manufacturing. <br><br>It’s pretty obvious that the multinationals are not going to let the government in Alberta get its natural resources back without a fight, so we would likely need a constitutional amendment before we could do this. <br><br>But I think that nationalizing the oil would be an important step for Canada to recover from its economic malaise.