Satan's Evil Twin Posted September 1, 2012 Share Posted September 1, 2012 Alberta deficit set to triple on slumping oil prices DAWN WALTON AND CARRIE TAIT Calgary — The Globe and Mail Published Thursday, Aug. 30 2012, 1:25 PM EDT Last updated Friday, Aug. 31 2012, 4:20 AM EDT Alberta is veering toward a deficit as high as $3-billion this year, more than three times larger than expected, as a slump in oil prices forces the government to find ways to slash spending. Finance Minister Doug Horner, who delivered the first-quarter fiscal update Thursday, blamed a shaky global economy and said Alberta’s bottom line for 2012-13 has been hammered by weak royalties from bitumen and conventional oil, and low land lease sales to energy producers. Unless commodity prices improve, it could mean a provincial deficit of $2.3-billion to $3-billion, Mr. Horner said. He pledged to keep the province on track to reach a surplus position, as previously promised, by 2013-14. The surprising deficit forecast shows Alberta has been too optimistic about resource revenue as the province fails to capture the full benefit of strong global oil demand. Though prices for Brent and West Texas Intermediate crude are firm, Canadian producers have been suffering through a prolonged period of discounted domestic prices because of oil export bottlenecks that often cause an oversupply. For Alberta, that contributed to a $400-million drop in revenue for the quarter ended June 30. When the Progressive Conservative government delivered its budget in advance of April’s provincial election, the projected deficit of $886-million for fiscal 2013 was based on an average private sector oil forecast of $99.38 (U.S.) per WTI barrel. But during the first quarter, private sector analysts downgraded their original estimates to an average of $93.62 a barrel. Critics and industry watchers aren’t so sure Alberta can get back to surplus any time soon. Alberta will continue to face steeper-than-usual discounts for its crude as long as there is no access to world markets via pipelines to the west coast, said Patricia Mohr, Scotiabank’s commodity economist in Toronto. She calculated the 2012 discount on Canadian crude has been roughly $6 per barrel greater than normal, costing producers $3-billion. That is $3-billion less in revenue on which they pay taxes. “My concern is that to guarantee world prices for the crude, we do need to tap the faster growing markets in Asia,” Ms. Mohr said. But Canadian producers are also competing with a booming supply in the U.S., which will see production grow by 1 million barrels per day between 2009 and the end of this year, with another 500,000 barrels per day of growth in 2013. The Fraser Institute, a public policy think-tank, recently issued a report titled “Alberta’s 2012 Fiscal Time Bomb,” which projected a higher-than-expected deficit due to the government’s “unrealistic resource revenue” and economic growth forecasts. Leader author Mark Milke said the province has banked on “overly optimistic oil and gas prices” and continues to spend beyond its means. “They must restrain and pare per-capita program spending sooner rather than later,” he concluded, “If they find such direct action unpalatable, they could hold program spending to a rate of growth below that of government revenues generally.” Alberta’s ministers have now been asked to review capital spending, examining each program’s intent and cost. Mr. Horner wants departments to save at least $500-million combined. “We are not going to cut for the sake of cutting,” he said. “We are tightening our belts. “We will cap overall operating spending to budget allocations and we have asked departments to operate lower than budget.” There will be no new money for public sector negotiations, he continued. The government will not impose new taxes or make “drastic cutbacks” or affect day-to-day services. Spending cuts haven’t been ruled out. Opposition parties, which all described Premier Alison Redford’s original budget as too spendthrift and too optimistic, were quick to say they were right. The Wildrose Party, the official opposition in Alberta, described it as “Alison Wonderland” accounting. “We’re in a situation where we’re going to see a massive return to debt or severe cuts in social spending and infrastructure,” said Wildrose finance critic Rob Anderson, “It’s a sad story.” The Liberals called it a “fudget budget” based on “overly rosy” resource projections. Mr. Horner insisted the Tory government would still meet its original budget since there is still the rest of the fiscal year ahead. “This is a snapshot of a certain point in time – and doesn’t tell the whole story.” With a report from Shawn McCarthy in Ottawa http://www.theglobea...article4509683/ "No! We can't raise royalties and benefit more money from oil!" Link to comment Share on other sites More sharing options...
Sharpshooter Posted September 1, 2012 Share Posted September 1, 2012 Link to comment Share on other sites More sharing options...
Snake Doctor Posted September 1, 2012 Share Posted September 1, 2012 Not managing money right if they have a deficit and major revenue comming in. Link to comment Share on other sites More sharing options...
aGENT Posted September 1, 2012 Share Posted September 1, 2012 I have little pity for them and their poor management of toxic sludge and provincial expenditures. Link to comment Share on other sites More sharing options...
TOMapleLaughs Posted September 1, 2012 Share Posted September 1, 2012 Could care less. Link to comment Share on other sites More sharing options...
JoeyJoeJoeJr. Shabadoo Posted September 1, 2012 Share Posted September 1, 2012 I guess that means no Alison bucks? Link to comment Share on other sites More sharing options...
Navyblue Posted September 1, 2012 Share Posted September 1, 2012 Link to comment Share on other sites More sharing options...
Sharpshooter Posted September 1, 2012 Share Posted September 1, 2012 That's the guy who rode the nuke in Armageddon isn't it... Link to comment Share on other sites More sharing options...
kyledude Posted September 1, 2012 Share Posted September 1, 2012 Alison Redford should attend fewer Bilderberg meetings. Perhaps that could save us some money. When the government's ultimate goal is to improve the oil industry's bottom line, they haven't failed - they've succeeded. And rather than derive funding for their massive bureaucracy from their corporate masters, they've chosen to bankrupt the institution. We've seen this scenario playing out all over North America, so to single out Alberta isn't really fair. BC isn't immune either. The part that really scares me about this province is our drooling electorate, which is apparently so brainwashed there's nothing we could ever do to correct the problem. It's a total nightmare. Link to comment Share on other sites More sharing options...
Losing With Pride Posted September 1, 2012 Share Posted September 1, 2012 Alberta could start by charging Provincial Sales Tax like everyone else. Saskatchewan: 5% GST. 5% PST Alberta 5% GST. 0% PST. problem? Link to comment Share on other sites More sharing options...
Shift-4 Posted September 1, 2012 Share Posted September 1, 2012 problem? Link to comment Share on other sites More sharing options...
Electro Rock Posted September 2, 2012 Share Posted September 2, 2012 Let's be real, Alberta wouldn't have a deficit if it wasn't forced to fork over an additional $10+ billion every year in colonial tribute transfer payments that mostly end up benefitting Quebec. If Alberta had been allowed to keep and invest that money over the years, instead of being just a resourse driven economy it would probably have long since achieved full spectrum economic powerhouse status, given its enterprising culture. Too bad this is Canada where the vultures eat better than the lions. Link to comment Share on other sites More sharing options...
nucklehead Posted September 2, 2012 Share Posted September 2, 2012 Alberta could start by charging Provincial Sales Tax like everyone else. Saskatchewan: 5% GST. 5% PST Alberta 5% GST. 0% PST. problem? Link to comment Share on other sites More sharing options...
Mr. Ambien Posted September 2, 2012 Share Posted September 2, 2012 Consumption.. too high.. reduce consumption and thus spending.. Common sense? Not in the 21st century. Link to comment Share on other sites More sharing options...
Ghostsof1915 Posted September 2, 2012 Share Posted September 2, 2012 Or we could create economies in Canada that focus on long term growth, using and managing properly renewable resources. Canada has a 19th Century economy in the 21st century, with Oil Barons, and others trying to rape the country instead of investing in it. Canada can make superior products if we put the time and investment in. But we'd rather sell our resources to other nations and buy it back and let other countries make the profit. This constant let's sell ourselves out to everyone else is why we never get anywhere. We should be working on renewable energy, light manufacturing, and technology and have a strong and diversified economy. We need to protect our renewable resources, and our environment so we can have a country we can live in for generations. Not looking for a quick buck, and be stuck with water we can't drink, food we can't eat, and air we can't breathe. Link to comment Share on other sites More sharing options...
SterlingArcher Posted September 2, 2012 Share Posted September 2, 2012 waiting for more ralph bucks Link to comment Share on other sites More sharing options...
The Colt 45s Posted September 2, 2012 Share Posted September 2, 2012 As the article states, build the pipeline and Alberta's oil gets to market at market prices. Link to comment Share on other sites More sharing options...
Electro Rock Posted September 3, 2012 Share Posted September 3, 2012 Or we could create economies in Canada that focus on long term growth, using and managing properly renewable resources. Canada has a 19th Century economy in the 21st century, with Oil Barons, and others trying to rape the country instead of investing in it. Canada can make superior products if we put the time and investment in. But we'd rather sell our resources to other nations and buy it back and let other countries make the profit. This constant let's sell ourselves out to everyone else is why we never get anywhere. We should be working on renewable energy, light manufacturing, and technology and have a strong and diversified economy. We need to protect our renewable resources, and our environment so we can have a country we can live in for generations. Not looking for a quick buck, and be stuck with water we can't drink, food we can't eat, and air we can't breathe. Link to comment Share on other sites More sharing options...
لني Posted September 3, 2012 Share Posted September 3, 2012 Or we could create economies in Canada that focus on long term growth, using and managing properly renewable resources. Canada has a 19th Century economy in the 21st century, with Oil Barons, and others trying to rape the country instead of investing in it. Canada can make superior products if we put the time and investment in. But we'd rather sell our resources to other nations and buy it back and let other countries make the profit. This constant let's sell ourselves out to everyone else is why we never get anywhere. We should be working on renewable energy, light manufacturing, and technology and have a strong and diversified economy. We need to protect our renewable resources, and our environment so we can have a country we can live in for generations. Not looking for a quick buck, and be stuck with water we can't drink, food we can't eat, and air we can't breathe. Link to comment Share on other sites More sharing options...
The Colt 45s Posted September 3, 2012 Share Posted September 3, 2012 Alberta's problem is that it is landlocked. The only outlets into the global market is the pipeline to the US. It is also why Keystone was so important, as it would allow our oil to compete on the open bitimum market. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.