Alberta premier warns of $6 billion shortfall in oil revenue

Thu Jan 24, 2013 9:50pm EST
 

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Alberta's premier warned on Thursday that the Western Canadian province faced a C$6 billion ($6 billion) shortfall in revenue due to deeply discounted prices for its crude oil but offered no specifics on how to prevent falling deeper into the red.

Alberta's financial forecasts have been thrown into disarray by fast-growing output from its vast oil sands and limited pipeline capacity to move it to markets in the United States and elsewhere. That has pulled the price of a barrel down to less than half that of international benchmark Brent oil.

The situation has prompted Premier Alison Redford and her government to warn of a tough budget on March 7, and raised questions about her ability to meet a promise of erasing its budget deficit in the upcoming fiscal year.

In an eight-minute televised address, Redford explained the reasons for the sharply reduced take from Alberta's biggest industry and pledged not to raise taxes to make up the difference, but did not say where she will cut spending.

In fact, she made note of strong desire in the province of 3.8 million people for new roads, schools and healthcare facilities.

"Despite falling oil revenues, I give you my commitment that as we deliver our long-term economic plan for Alberta, we will be thoughtful in our approach and we will deliver on these priorities," she said.

Alberta is Canada's largest oil-producing province and the largest foreign energy supplier to the United States, and had become used to boom times until the oil market weakened last year.

Redford has been an enthusiastic promoter of TransCanada Corp's contentious Keystone XL pipeline, which would carry Alberta's crude to refineries in Texas.   Continued...

 
Alberta Premier Alison Redford (C) answers questions during a news conference regarding the E. coli outbreak after a meeting with cattle ranchers at the Bell L ranch near Airdrie, Alberta, September 30, 2012. REUTERS/Todd Korol