Canadian Manufacturing

Oil prices plunge: Alberta Opposition leader urges premier to resubmit budget

Rachel Notley says low prices will conservatively send the projected deficit for 2020-21 from $6.8 billion to almost $11 billion

March 9, 2020  The Canadian Press

Alberta’s Opposition leader says Premier Jason Kenney needs to withdraw his budget and submit a new one that recognizes how free-falling oil prices are gutting revenues.

Rachel Notley says low prices will conservatively send the projected deficit for 2020-21 from $6.8 billion to almost $11 billion.

She says Kenney has left Alberta vulnerable by slashing corporate income taxes last year and using wildly optimistic oil revenue projections in the budget introduced almost two weeks ago.

She also says Kenney was wrong when his government dismantled tax incentives last fall designed to lure more diversified businesses, including high-tech companies, to Alberta.

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Notley says it’s time to put partisanship aside and convene a dual-party committee to figure out a way to get through the oil-price crisis.

The premier is to hold a news conference in Calgary later today.

Alberta’s oil-based economy, already suffering from reduced demand due to the novel coronavirus, is getting a gut punch due to an all-out price war between Saudi Arabia and Russia.

The price for West Texas Intermediate crude fell to just under US$31 a barrel on March 9. Alberta has budgeted its oil revenue based on US$58 a barrel. Each $1 drop in price represents a cut of about $200 million from Alberta’s bottom line.

On March 8, Energy Minister Sonya Savage said on Twitter that she was watching developments, but she noted the energy industry has lowered costs and become efficient over the years.

Kenney had said last week that his government’s goal of balancing the books by 2023 may not happen.

His United Conservatives won last April’s election on a promise to focus on revitalizing oil and gas while eradicating a string of multibillion-dollar deficits.