25 per cent improvement in our terms of trade, which alone has been responsible for roughly two - thirds of the 15 per cent gain in real per capita disposable income recorded over that period. these income gains have helped reduce corporate leverage to its lowest level in a quarter of a century and have helped our governments to record consistent fiscal surpluses. higher commodity prices bring increased investment, which entails direct and indirect benefits not only for the sectors in question, but also for the service sectors that support them. as well, many individual canadians – and their pension funds – have benefited greatly from the gains in the value of their own investments in commodity - producing firms. 11 finally, the rise in our terms of trade has brought with it an associated appreciation of our currency that has benefited everyone by lowering the cost of imported goods and services. with this downward pressure on import prices, productivity - for example, the prices of many non - indexed commodities have risen more rapidly than those of indexed ones. the tsx energy sector has risen roughly 18 per cent per year since the beginning of 2002, while the metals and mining sector is up 11 per cent annually and the fertilizers and agricultural chemicals sector is up 44 per cent annually. these sectors have a combined weighting of 50. 3 per cent of the tsx composite index. enhancing machinery and equipment – much of which is imported – has become less expensive for all firms, not just commodity producers. these benefits are important. however, it is unavoidable that large, sustained changes in terms of trade – whether favourable or unfavourable – will cause stress and dislocation because of significant shifts in production and employment among economic sectors. in macroeconomic terms, terms - of - trade shocks trigger a shift of resources to activities generating higher income. from that perspective, postponing adjustment would mean forgoing the potential income gains that the reallocation of resources can bring. adjustment is always difficult, but it is vital to our long - term economic prosperity. despite the difficulties involved, the adjustment process of the past few years has gone more smoothly than in previous periods. canada's labour force participation rate has risen to a record high, and the jobless rate has fallen to a 33 - year low. while the manufacturing sector has lost about one in seven jobs since 2002 – a total of about 335, 000 jobs – total employment in canada has risen by 1. 6 million jobs over the same period. equally encouraging is the quality

, 7 output from the oil sands is expected to grow by 3 million barrels per day by 2020, representing about 15 per cent of expected marginal global demand. 8 other supplies can be expected to come on stream, and alternative energy sources should be developed. although there will be lags, it would be a mistake to assume that the market has ceased to function. demand will also be more responsive over time. suv sales in the united states have fallen by nearly one - third so far this year – an important early indicator. oil demand in oecd countries has been essentially flat since 2003, and the international energy agency projects it to remain weak for the next few years. 9 as a result, the extent of continued upward demand pressure will depend almost exclusively on emerging markets. there are several considerations. first, we are about to find out the extent to which slowing domestic demand growth in the g - 7 will affect growth in emerging asia. second, the stance of monetary policy in emerging markets will be an important determinant of prices in the short term. monetary policy remains highly accommodative in a number of fast - growing economies that are major marginal consumers of commodities. the combination of accommodative monetary policy and overheating economies will eventually be reversed, either through policy action or generalized inflation. in either case, aggregate demand in emerging markets will likely slow relative to current trends. a third consideration is that the demand response in many economies is currently being muted by the prevalence of administered food and energy prices. these efforts to protect the most vulnerable are usually poorly targeted and, as a consequence, highly distortionary. by keeping domestic commodity prices artificially low, the authorities are simultaneously data supplied by the energy information administration ( eia ). see http : / / www. eia. doe. gov / ipm /. according to the canadian association of petroleum producers ( capp ), a 100, 000 - barrel - per - day integrated oil sands project that cost $ 3. 3 billion to build in 2001 now costs over $ 10 billion. see http : / / www. capp. ca / raw. asp? x = 1 & dt = pdf & dn = 134739. data provided by imf. data provided by alberta finance and enterprise. production estimate from capp. demand estimate from the eia. data from the energy information administration. see http : / / www. eia. doe. gov / emeu / steo