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Alberta could see a budget surplus of some C$2.4 billion, equal to around $1.8 billion, in its new fiscal year, assuming a price for the local crude oil benchmark of C$78 per barrel.
This is what the Finance Ministry of Canada’s biggest oil province said in the presentation of budget 2023. The ministry also forecast a surplus for the next two fiscal years, although slightly lower than the 2023/24 expected surplus. It is, for its part, substantially lower than the surplus Alberta expects to book for fiscal 2022/23 when oil prices surged over $100.
According to the Finance Ministry, Alberta’s total revenues this fiscal year will top C$70 billion, or over $51 billion. However, this will be a decline of close to $4 billion on revenues projected for the previous fiscal year because of lower oil prices and the looming global recession. However, revenue will rise over the next two fiscal years.
The ministry expects oil sands production at 3.345 million barrels daily in the current fiscal year, with conventional oil production at 497,000 bpd.
“At $76 oil, it would land us at about $18 billion in resource revenues, if that were to hold for the full fiscal year,” a University of Calgary economist told the Calgary Herald days before the release of the budget. “Despite oil prices coming down from their highs last year, we’re still in a really strong position,” Trevor Tombe noted.
The budget assumes a slightly higher oil price, which could boost revenues even further as the oil industry remains essential for the province’s income, despite increasing pressure from environmental activist groups and the federal Canadian government.
In fact, the Canadian oil industry has become notorious for that pressure, although companies continue to produce oil and gas and support provincial and federal budgets. The latest blow to Canada’s oil came from the Trudeau government’s Just Transition bill that eyes, among other things, the re-employment of oil industry workers elsewhere as the country moves away from fossil fuels.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com