High-flying oil and gas prices paint rosier shade of red ink on Alberta budget
Alberta's budget outlook for this year is turning a rosier shade of red ink with jobs up, the deficit down and oil and gas prices humming along at unexpectedly high levels.
Finance Minister Travis Toews says the deficit is expected to be $5.8 billion when the government closes the books on the 2021 fiscal year on March 31.
That's a third of the $18.2-billion deficit he predicted when he tabled the budget back in February.
“Our economic recovery is becoming more entrenched,” Toews told reporters Tuesday as he delivered the midterm budget update.
“Almost all of Alberta's revenue sources are improving, along with the economy.”
Alberta's economic arrows are pointing up across the board propelled by a resource-driven economy sailing higher than expected as the global economy emerges from the COVID-19 pandemic.
Revenue from non-renewable resources is expected to be almost $11 billion, an $8-billion leap from what was first projected.
The government said Alberta's oil production reached 3.5 million barrels per day in September, a nine per cent rise, helping offset slower growth in other areas such as tourism.
Oil is also benefiting from a natural gas crunch in Europe, which is seeing customers switch over to oil for the winter given the spike in natural gas prices.
“Global petroleum demand has outstripped supply, underpinned by a solid pickup in the global economy and ongoing output restraint by OPEC (the Organization of the Petroleum Exporting Countries),” said the midterm report.
Alberta originally forecast the price of West Texas Intermediate - the benchmark price for North American oil - at US$46 a barrel this year. It has since been revising that figure upwards and is now predicting it will average US$70.50.
Natural gas revenues are pegged to bring in almost $1.6 billion, triple what was projected in February, due to the rebound in the global economy and to the accelerated switch away from greenhouse gas-intensive energy sources like coal.
However, Toews said caution is needed given that today's soaring price peak can quickly be followed by a dizzying plunge.
“Oil prices are volatile, as we see today, and major fluctuations can be difficult to predict. It's a story Albertans have been living for decades but one most acutely lived in recent years,” said Toews, referring to when oil prices free-fell into negative territory as COVID-19 all but shuttered the global economy in early 2020.
Among other highlights, the report predicts Alberta's real gross domestic product, a composite indicator of economic output, is expected to grow by 6.1 per cent, up from 4.8 per cent at budget.
Total revenue is expected to be almost $58 billion, about $14 billion more than projected.
Total expenses are approaching $64 billion, about $2 billion more, due mainly to COVID-19 expenses and drought relief.
The unemployment rate is forecast at almost nine per cent, down from about 11 per cent in 2021, and it is expected to keep dropping to under six per cent by 2024.
Personal and corporate income taxes are pegged to reach almost $16 billion, about $2.5 billion higher than budgeted.
Taxpayer-supported debt is also falling and is expected to be almost $102 billion by spring.
Opposition NDP finance critic Shannon Phillips said while the price rise helps Alberta, Toews needs to implement a plan to help Alberta families caught in the pincer-grip of sharply rising inflation and hikes in fees and costs under the United Conservative government.
“This update might look like Christmas has come early for the UCP government, but for Alberta families, Christmas is looking more expensive than ever with only higher taxes and higher costs for everything coming due in the new year,” said Phillips.
This report by The Canadian Press was first published Nov. 30, 2021.
CTVNews.ca Top Stories
Doctors say capital gains tax changes will jeopardize their retirement. Is that true?
The Canadian Medical Association asserts the Liberals' proposed changes to capital gains taxation will put doctors' retirement savings in jeopardy, but some financial experts insist incorporated professionals are not as doomed as they say they are.
Something in the water? Canadian family latest to spot elusive 'Loch Ness Monster'
For centuries, people have wondered what, if anything, might be lurking beneath the surface of Loch Ness in Scotland. When Canadian couple Parry Malm and Shannon Wiseman visited the Scottish highlands earlier this month with their two children, they didn’t expect to become part of the mystery.
Fair in Ontario, flurries in Labrador: Weather systems make for an erratic spring
It's no secret that spring can be a tumultuous time for Canadian weather, and as an unseasonably mild El Nino winter gives way to summer, there's bound to be a few swings in temperature that seem out of the ordinary. From Ontario to the Atlantic, though, this week is about to feel a little erratic.
What a urologist wants you to know about male infertility
When opposite sex couples are trying and failing to get pregnant, the attention often focuses on the woman. That’s not always the case.
'It was instant karma': Viral video captures failed theft attempt in Nanaimo, B.C.
Mounties in Nanaimo, B.C., say two late-night revellers are lucky their allegedly drunken antics weren't reported to police after security cameras captured the men trying to steal a heavy sign from a downtown business.
Bank of Canada officials split on when to start cutting interest rates
Members of the Bank of Canada's governing council were split on how long the central bank should wait before it starts cutting interest rates when they met earlier this month.
Quebec nurse had to clean up after husband's death in Montreal hospital
On a night she should have been mourning, a nurse from Quebec's Laurentians region says she was forced to clean up her husband after he died at a hospital in Montreal.
Northern Ont. lawyer who abandoned clients in child protection cases disbarred
A North Bay, Ont., lawyer who abandoned 15 clients – many of them child protection cases – has lost his licence to practise law.
An Ontario senior thought he called Geek Squad for help with his printer. Instead, he got scammed out of $25,000
An Ontario senior’s attempt to get technical help online led him into a spoofing scam where he lost $25,000. Now, he’s sharing his story to warn others.