Higher energy prices expected to deliver boost in budget update

Alberta’s finance minister says the recent bullish run on energy prices is part of a stronger economic story on the province’s bottom line that will be revealed in the upcoming second-quarter budget update.

Travis Toews says investment is gaining strength across a range of sectors, but he is not revealing details until the update is delivered 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,” Toews told reporters at the legislature Monday.

“We’re seeing improved investment attraction across many key sectors in the province.”

Toews introduced the budget back in February projecting an $18-billion budget deficit with West Texas Intermediate - the North American oil benchmark price - estimated to average US$46 a barrel throughout the year.

But both oil and natural gas, mainstays of Alberta’s resourcebased economy, have been enjoying banner years. That has prompted the province to adjust both revenues and projections.

In the first-quarter budget update in August, Alberta’s West Texas forecast was raised to

US$65 a barrel and the deficit projection halved to less than $8 billon.

Projected natural gas revenues more than doubled to $1.2 billion from February’s budget.

Economist Trevor Tombe said up until last week West Texas was averaging US$71 a barrel alongside a price surge in natural gas to almost $3.60 a gigajoule - up substantially from the $2.60 gigajoule predicted at budget.

He said all that could mean an extra $2 billion on top of the $10 billion the province was expecting to receive from all non-renewable resources this fiscal year.