Oil’s not well in Alberta.
That’s because there’s an inverse relationship between the amount of resource revenue flowing into government coffers and the size of the deficits expected to be run over the next three years.
Add in the impact of US tariffs — which are expected to cut economic growth almost in half — and it adds up to barrels of red ink on the taxpayers’ bank balance.
According to the budget documents released Thursday, resource revenue is expected to fall to $17.03 billion this year from $21.51 billion last year. And that itself was about $4 billion higher than budgeted.
About $12.8 billion is in the form of bitumen royalties compared to $16.86 billion last year and $14.52 billion in 2022 when oil prices were almost USD$90 per barrel.
By contrast, the government is banking on crude prices of $68 in 2025, compared to $74 in 2024. Oil prices are expected to rebound to $71.50 by 2028 and CAD$2.90 for natural gas.
“(The) government will continue to promote Alberta as a reliable partner in supporting North America and global energy security to investors and will advocate locally, nationally, and internationally for the optimization of new and existing infrastructure to access new markets for Alberta's energy and mineral resources,” it said.
That includes far reaching impacts from even a modest tariff of 10% on Alberta’s oil production, which will cut economic growth to 1.7% next year from more than 3% in the prior fiscal years.
“As the economy adjusts to the tariffs over the medium term, growth is forecast to pick up to over two per cent by 2027,” it said.
And despite expected retaliation by the federal government, there are no plans to use Alberta’s oil as a weapon in a prolonged trade war with the hope of minimizing the damage.
“Government will continue to promote Alberta as a reliable partner in supporting North America and global energy security to investors and will advocate locally, nationally, and internationally for the optimization of new and existing infrastructure to access new markets for Alberta's energy and mineral resources.”
