High Energy Prices May Benefit Alberta’s Budget

According to Travis Toews, finance minister of Alberta, the recent rise in energy prices is part of a brighter economic scenario for the province’s bottom line, which will be highlighted in the next second-quarter budget report.

The minister claims that investment is on the rise in many different industries, however, he will not give any further details until the next update on Tuesday.

“Certainly, rising energy prices are part of the good news story for Alberta, there’s no doubt about that, but tomorrow we can talk about a much broader recovery,” Travis Toews told reporters at the legislature on Monday. “We’re seeing improved investment attraction across many key sectors in the province.”

Toews announced the budget in February, anticipating a shortfall of $18 billion using a West Texas Intermediate oil benchmark price of US$46 a barrel on average throughout the year, which is the North American oil benchmark price.

Oil and natural gas, Alberta’s two primary resources, have both had exceptional years. Revenues and estimates have been revised as a result of this. In the first-quarter budget update in August, Alberta’s West Texas forecast was lifted to US$65 a barrel and the deficit projection was reduced to less than $8 billion.

From February’s budget, projected natural gas income increased by more than double to $1.2 billion.

Natural gas prices surged to over $3.60 a gigajoule from the budgeted price of $2.60 a gigajoule, according to economist Trevor Tombe, who said West Texas crude oil was averaging US$71 a barrel until last week.

“Tomorrow we may very well see certainly above 10 (billion dollars), I think no question about that, but maybe 11 or 12,” said Tombe. “It depends how conservative the government wants to be (in its price forecasts).

“We’re still in a time of pretty incredibly high uncertainty (given COVID-19), so all of these numbers should be therefore taken with a grain of salt.” Tom added. “But it’s nice that we’ve seen some really positive developments for Alberta in recent months,”

In addition to rising user fees, bills and insurance rates under Kenney’s United Conservative Party, the government is benefiting from higher energy prices, according to Opposition NDP finance critic Shannon Phillips.

“It’s time for Premier Jason Kenney (and) his finance minister to put their feet on the ground, get their heads out of the clouds and focus on what’s actually worrying ordinary people,” said Phillips.

Original source material for this article taken from here