Nia Williams

CALGARY (Reuters) – Canada’s largest oil-producing province, Alberta, is expected to post its first surplus budget since 2014/15. Finance Minister Travis Toews stated on Thursday that the rising global oil prices and an increase in oil production have boosted provincial revenue.

Alberta is expecting a surplus in excess of C$500million ($391 million), compared to the C$3.2billion deficit in current fiscal year. C$18.2billion was projected in February 2021. The deficit projection for 2021/22 has been significantly reduced.

Reuters last week reported that Alberta is on track to achieve a budget surplus for the next fiscal year.

It also projects surpluses of C$900million and C$700million in 2023/24 & 2024/25, according to the provincial forecasts.

This dramatic improvement in Alberta’s financial fortunes may give Premier Jason Kenney some boost. In April his United Conservative Party will hold a leadership review. Kenney has been criticized for how he handled the COVID-19 pandemic.

Alberta’s 2022/23 budget assumptions were based on an average oil price at $70/barrel, which is significantly lower than the $96 per barrel current price. On Thursday, oil prices rose to $100 per barrel after Russia invaded Ukraine. These fears raised concerns about possible disruptions to world energy supplies.[O/R]

Toews declared that Alberta’s economy would fully recover from its 2014 contraction and will continue to lead the nation for economic growth in 2022.

Alberta’s oil and gas industry accounts for around 17%. The province has been struggling since 2014 when the global crude price slump caused it to reduce capital expenditure and fire thousands of employees.

Toews indicated that Alberta is working to diversify its economy in order to be less dependent on volatile commodity price fluctuations.

He stated that while oil prices may rise and down, Alberta will be able to maintain stability and sustainability through its income statement.

Alberta is expected to generate C$13.8billion in revenue from resource in 2022/23. This figure was up from C$13.2billion in 2021/22. C$2.9 billion was the original forecast of Alberta’s resource revenue for 2021/22, which was made in early 2018, when oil prices had just recovered from a pandemic.

Alberta’s 2022 economic growth is expected to be 5.4%, a slight decrease from the 5.8% seen in 2021.

($1 = 1.2802 Canadian dollars)