This week's startling jump in economic growth was due to just one thing.

As economists and commentators fretted over a trade war with the United States and concerns that Europe and Mexico might be making deals that excluded Canada, the Canadian oil industry was on a tear.

Almost exactly four years since the Canadian petroleum industry went from hero to zero as oil prices plunged, investment in the Alberta oilsands and the Atlantic offshore industry are on the rise again.

And despite a stubborn unwillingness of the Canadian dollar to budge off its lows, there are reasons to think it may follow oil up.

Oil on the rise

According to figures released this week by Statistics Canada, construction was still the biggest driver of the Canadian economy — but remained relatively flat.

A surge in oil and gas investment, meanwhile, meant the sector beat out the sagging banking and insurance industries to take second place at seven per cent of the economy.

Investment in the oilsands is up 14 per cent in the last year, hitting an all-time high.

There are, of course, many qualifications, including a statistical quirk in the comparison between sectors. But Canadians have their own way of confirming the surge in global demand for oil: the cost of a tank of gas is heading back toward 2014 levels.

Select industries as a proportion of GDP. (Robson Fletcher/CBC)

There are no guarantees in the oil and gas business. As has been observed many times in the past, an industry that cannot foresee a decline in prices — from about $100 in 2014, to about $30 two years later — cannot be trusted to know the future.

Oil has been off its recent highs of more than $70 US, but since hitting its 2016 lows, the trend is undeniable: In the last year alone, oil prices have marched steadily higher.

In its latest Global Risk Radar report, the Swiss banking giant UBS contemplated the global economic impact of oil prices at $120 US a barrel, giving such an event a 20 to 30 per cent probability in the next six to 12 months.

"During previous episodes of large oil supply shocks, global equities fell about 15 per cent on average, but recovered within six months," said the UBS report.

Running out?

That kind of supply shock would require a major collapse in output by a large supplier, caused by something like an outbreak or escalation of conflict in the Middle East. (As one commentator pointed out, such scary events are for scenario planners and risk testers.)

But fresh evidence suggests oil demand and prices will remain strong.

From a low of about $45 last summer, the price of oil has rallied and risen steadily higher ever since. (Kevin Lacroix/CBC)

Several reports suggest that Saudi oil — the bottomless pit for satisfying global demand — cannot expand production quickly or easily. Data crunched yesterday from Bloomberg News shows crude output from both Saudi Arabia and Russia neared record peak levels in July.

China and India, meanwhile, are consuming record amounts of oil from Iran. And the huge reserves in Venezuela lay idle as the country's economy continues its tailspin, with its inflation rate heading toward 1 million per cent.

It is a well-accepted fact that the earth has plenty of oil. Even as oil prices and investment in new production declined, output continued to grow.

What we are seeing now may be a sign that as underdeveloped economies catch up with Europe and North America in energy use, and the developed world heads into a U.S.-led economic growth spurt, production just hasn't been keeping pace.

At any moment, supply and demand are in balance. Under-producing by just a little pushes prices up, giving the signal it is time to invest.

Back on track

If this analysis proves true, the Canadian oil industry is back on track. If it can be finished before the next oil slump, the Trans Mountain pipeline expansion will be a great taxpayer investment — purely in financial terms.

Ironically — and painfully, for some — this new oil-and-gas boom comes just as forest fires and deadly heat waves offer new evidence of the impact of burning fossil fuels.

But even countries committed to fighting climate change are somehow caving into the economic pressure to produce and consume more oil.

An employee looks over Aramco's Ras Tanura oil refinery in Saudi Arabia on May 21, 2018. (Ahmed Jadallah/Reuters)

As my colleague Pete Evans reported last month, fears of the effects of trade sanctions have so far cured Canada's Dutch disease — the tendency that the currency of a small economy, like ours, will rise as oil exports grow.

Interestingly, a similar phenomenon has been observed among other so-called petrocurrencies.

Dislocation between <a href="https://twitter.com/hashtag/oil?src=hash&ref_src=twsrc%5Etfw">#oil</a> and oil linked currencies is getting wider <a href="https://t.co/45SD2dwrsX">pic.twitter.com/45SD2dwrsX</a> —@chigrl

As well as sparking debate, the widening spread between the price of oil and oil-linked currencies has some forex traders rubbing their hands, imagining the killing to be made once the individual forces holding the loonie and its companions down begin to weaken.

Currencies share with oil a reputation for refusing to follow any analytical script, instead heading off with minds of their own. But it would seem reasonable that anyone wanting to do something that benefits from a low loonie — selling a company to a foreign buyer or moving cash to Canada to invest — should consider doing it while they have the chance.

In the longer run, the prediction that worsening climate damage to our one and only Earth will convince people to leave fossils fuels in the ground may finally prove true.

Despite the latest blast of heat and flame, the current political and economic trend seems to be heading in the opposite direction.

Follow Don Pittis on Twitter: @don_pittis