Oil prices continue to slide lower
Canada’s top oil-producing province is set to reap a US$10 billion windfall from rising crude prices.
Alberta, the western province that’s home to Canada’s large oil-and-gas producers, will report a $13.2 billion (US$10 billion) surplus in its current fiscal year, a 25-fold increase from the $515 million surplus it originally projected for the year, Premier Jason Kenney said in a video posted Monday on Twitter.
The reversal of fiscal fortune for Alberta, which ran a $17 billion deficit in the fiscal year ended March 2021, comes as benchmark oil prices have surged about 32 per cent in the past 12 months.
The larger surplus will allow the province to ease taxes for residents to help them weather the effects of surging inflation, Kenney said. The province will resume the practice of indexing its tax brackets to inflation -- saving the average Albertan about $300 for the year -- and keep in place an electricity rebate and the suspension of its gasoline tax, he said.
The province also will contribute almost $3 billion of the windfall into the Heritage Savings Trust Fund, the largest ever annual contribution to the special fund meant to stockpile some of Alberta’s hydrocarbon wealth for future generations. But the government will resist calls for new spending that might exacerbate inflation, Kenney said.
“Thankfully, we are back in a strong surplus position, and we’re not going to go out -- as some will demand -- and spend it on every interest-group demand,” Kenney said in the video. “We will make careful investments where it’s needed, like continuing to increase health-care capacity and criminal justice to keep our streets safe.”
The turnabout in Alberta’s budget marks a late triumph for Kenney, who was elected in 2019 on promises to restore the province’s traditional fiscal conservatism. He later lost support among many party members over his handling of the pandemic. In October, members of Kenney’s United Conservative Party will elect a new leader to run against the left-leaning New Democratic Party in next year’s provincial election.
Alberta’s finance ministry is scheduled to release a detailed set of revised budget projections later Wednesday.