Concerns over Alberta’s 2015 budget as oil prices drop
Posted Dec 9, 2014 10:31 am.
This article is more than 5 years old.
Oil and water don’t mix, but in Alberta oil and budgets are inseparable because the province bases a lot of its budget planning on oil revenues.
That could be an issue if prices stay around the $65 a barrel mark, or if they drop any lower.
Just a $5 swing in the price of oil could mean millions of dollars either are or aren’t available to the provincial government.
Senior Economist with BMO Capital Markets Robert Kavcic told 660News it’s a big problem.
“Not as much this year as it is when we look out to 2015 when the government tables their budget next spring,” he said. “There’s going to a big downward revision to the oil price outlook to next year’s budget and that’s going to come with at least a few billion dollars of downside to revenues as well.”
He said any shortfall will have to be filled with spending restraint, a tax move or a draw on the sustainability fund.
Natural resource revenues are also important to the federal government, but Kavcic said that situation is a little better.
“Ottawa updated their fiscal numbers in November and they basically accounted for most of the decline in oil prices so I wouldn’t be too worried about the Federal fiscal situation just yet,” he explained.
