Newspaper article The Canadian Press

Premier Jim Prentice Says Low Oil Prices Punch $6B-$7B Hole in Alberta Budget

Newspaper article The Canadian Press

Premier Jim Prentice Says Low Oil Prices Punch $6B-$7B Hole in Alberta Budget

Article excerpt

Prentice puts a number on cost of low oil prices

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EDMONTON - Premier Jim Prentice says if oil prices continue to remain low, they will blow a $6 billion to $7 billion hole in the $40-billion provincial budget and no Albertan will be spared the pain.

"A return to extremely volatile energy prices has created conditions that we cannot ignore," Prentice said Tuesday in a speech to the Edmonton Chamber of Commerce.

"Tough choices are going to have to be made and they will be made."

Prentice was reacting to the price of oil that was around the US$100 barrel mark in the summer but has since fallen to the mid to low $60-range this week due to a supply glut caused by OPEC and increased production in the United States.

The price trough forced the province last month to revise its revenue forecasts for the current fiscal year from a surplus of $1.1-billion to $933 million.

The province forecast oil at US$95 a barrel in the spring budget but last month revised that to $75 a barrel.

Prentice has promised to keep the operating side of the budget balanced, but when asked later by reporters if that balance is in jeopardy, he said, "It remains to be seen.

"Clearly it makes it more challenging to balance the budget even in this fiscal year, let alone the fiscal year that we're facing," said Prentice.

Prentice has been making similar speeches in recent weeks, warning of "prudence" and "consequences" with low oil prices, the key driver of Alberta's economy.

He reiterated Tuesday his plan to look for in-house savings while keeping the rate of future spending increases below the benchmark level of inflation plus population growth.

He added that "current forecasting would mean that this (belt-tightening) will actually need to be even tighter."

Prentice said the cuts will not impact the core programs of education, health and care for seniors.

The savings, he said, are there. …

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