CALGARY — Alberta tabled Budget 2026 on Thursday and confirmed what Premier Danielle Smith’s UCP government has been saying for weeks — it contains a lot of red ink.The government is projecting a $9.4-billion deficit, up $3.4 billion from the $6.5-billion forecast in the last budget for 2025/26.The new fiscal plan is built on the prediction that West Texas Intermediate (WTI) oil will average US$60.50 per barrel — much lower than the previous projection.In Budget 2025, the UCP government assumed WTI would average US$68 in 2025/26, with a differential between WTI and Western Canadian Select (WCS) of $17.10 and an exchange rate of US$0.696 per Canadian dollar.The new budgeted US$60.50 reflects the continued uncertainty in the current geopolitical situation and global oil markets, with benchmark prices having trended downward for much of the past year.The impact on Alberta’s finances will now be significant, as more than 20% of provincial revenues come from non-renewable resource royalties..Benchmark oil price slump asks questions of Alberta's budget forecast.Lennie Kaplan, a former senior manager in the fiscal and economic policy division at Alberta Treasury Board and Finance, has said that each US$1 decline in WTI reduces Alberta’s total revenues by at least $750 million annually in 2026/27 — and likely more in 2027/28 and 2028/29.Smith told reporters earlier this week that the province would need oil to average US$74 a barrel this year to avoid a deficit, which, judging by current prices, appears to be well out of reach.“Unless oil prices break above US$75, it is virtually impossible to balance the budget without significant spending cuts,” Charles St. Arnaud, economist at Servus Credit Union, wrote in a recent analysis.Despite lower prices, Alberta’s oil and gas production has continued to climb in recent times, reaching an all-time high in January.The expansion of the Trans Mountain pipeline has also narrowed the discount between WCS and WTI, helping to cushion some of the blow from weaker global benchmarks.Still, the province’s structural spending trajectory adds to the pressure, as government expenditures have steadily risen since 2014-15 and are forecast to surpass $82 billion by the 2027-28 fiscal year.
