High Oil And Gas Prices Send Alberta’s Budget Surplus Soaring

• Alberta, Canada’s largest oil and gas province, is now expecting a $10 billion surplus this fiscal year, more than double what had originally been forecast.
• This influx of money, largely due to high oil and gas prices, means that the government can now re-index income taxes.
• Meanwhile, Canada is considering the possibility of LNG exports to Europe, although there appears to be a preference for hydrogen exports in the government.

Higher oil and gas prices will lead to a surplus of some $10 billion (C$13.2 billion) for Alberta this fiscal year, Premier Jason Kenney said this week.

When the budget for the year was introduced in February, the surplus for the year was expected to be less than half of that, at $391 million (C$511 million).

Thanks to that surplus, the Alberta Premier said in a video, the provincial government will be re-indexing income taxes. He claims that the average person in Alberta would see a $300 benefit from that re-indexing.

“Recognizing that our finances are back in order, we are now able to restore full indexation of Alberta’s provincial personal income tax system effective … (at the) beginning of this fiscal year,” Kenney said, as quoted by the Edmonton Journal.

Like other big oil and gas producers, Canada has been at the receiving end of higher income prompted by strong demand for fossil fuels and tightening supply.

Despite the federal government’s transition ambitions, energy has continued to be an important contributor to GDP and, somewhat surprisingly, the industry is enjoying growing support from the public, according to a recent poll.

Meanwhile, the government is considering LNG exports to Europe, although both Trudeau and his natural resources minister Jonathan Wilkinson have signaled they were a lot more enthusiastic about hydrogen exports than LNG.

During the recent visit of German Chancellor Olaf Scholz to Ottawa, Trudeau said Canada would study the feasibility of direct gas exports to Europe from the West Coast of Canada, saying “we will do what we can to contribute to the global supply of energy.”

At the same time, the Canadian PM made sure to reiterate his government’s dedication to the energy transition.

Canada is “looking in the medium term at expanding some infrastructure, but in a way that hits that medium term and long term goal of accelerating the transition not just off Russian oil and gas, but off of our global dependence on fossil fuels because of the impacts of climate change,” Trudeau said.

By Irina Slav for Oilprice.com

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