EDMONTON—Alberta Premier Jim Prentice says oil prices have plunged so far so fast that this year’s projected budget surplus will now be a $500-million deficit.
And he says while his advisers expect oil to rebound slowly over the coming years, the budget may remain in deficit until 2018.
“It’s the most serious fiscal circumstance we’ve seen in a generation in this province,” Prentice said in an interview Thursday.
“Things have turned so dramatically that we’ve gone from a $1.5-billion surplus in November to what looks like a $500-million deficit based on today’s projections.
“And there’s actually precious little we can do about that. We’ve been belt-tightening in government for the last quarter.”
Oil prices, the lifeblood of Alberta’s economy, have been in free fall since last summer, tumbling from US$100 a barrel to below US$50 a barrel this week.
“It’s like landing a 747 and you’re coming in on the runway. We’re in the last two months of the fiscal year. You can’t either increase your revenue or decrease your expenses in any meaningful way,” said Prentice.
The province predicted a barrel of West Texas Intermediate would average $92 a barrel this fiscal year ending March 31. That was revised to almost $89 in November as prices fell.
Each $1 drop in the average price over the course of a year costs the province $215 million.
Prentice said that in next year’s budget the