Don Ryan
Finance Minister Jim Flaherty says he's not overly worried about the risks of a spike in oil prices due to instability in the Middle East.
Rising oil prices have both positive and negative impacts in Canada, he said Friday.
"We export a lot of oil out of Canada, we consume a lot of oil in Canada as well. The oil sands, the oil industry in Canada is good for the entire country," he said after an address to the Halifax Chamber of Commerce.
Mr. Flaherty said he's watching the situation closely in case it creates inflation, but for the time being he isn't alarmed.
"We're watching what's going on in the oil markets. I don't think there's reason to have any strong concern about any long-term effects," he said.
"We'll have to watch and see whether there's any interruption, any significant interruption, in supply and if there is, whether that interruption of supply is made up by others."
Some economists have said they're worried by a sharp rise in food prices linked to higher fuel costs.
Analysts have warned that a fragile economic recovery could be stalled if oil prices rocket past $100 (U.S.) a barrel and stay there for months.
High oil prices have been a feature in each of the past three recessions, including the last one when oil hit more than $140 just months before the collapse.
TD Bank chief economist Craig Alexander has said studies show the impact on global growth is about 0.4 percentage points for each $10 increase in the price of oil.
For Canada, such an increase provides a minor net benefit of about 0.1 percentage points in gross domestic product output, but it is unevenly tilted to the West.
Mr. Flaherty said the oil price hikes may raise concerns about rising prices.
"We're always worried about inflation. Oil is one part of that," he said.
But he added that the federal government remains committed to keeping prices from rising too quickly.
"We have our agreement with the Bank of Canada to target inflation between 1 and 3 per cent in Canada. ... So we maintain that agreement now," he said.