Resource revenues take $1.4B hit, drag Alberta into red
Lack of market access for province's bitumen hurting revenue stream, says finance minister
Disappointing returns on resources continue to hurt Alberta's bottom line.
Resource revenue was $1.4 billion lower than expected, said Finance Minister Doug Horner as he updated the province's finances for the second quarter Wednesday morning.
The growing discount on Alberta bitumen prices, the rocky global economy, a higher exchange rate and lower land lease sales pressured the province's finances, he said.
"The biggest factor affecting our resource revenue right now is the lack of market access for our oil," said Horner in a press release. "We have one customer and one means to ship our product to them. On the other hand, our customer has many different suppliers to choose from. This is not a good situation to be in and it’s costing us dearly."
"The differential is about $29 a barrel right now — multiply that by two-and-a-half million barrels a day and the result is a tremendous impact to Alberta’s finances."
New Democrat leader Brian Mason said the Tories were overly enthusiastic in describing the province's wealth during the election.
"The Conservatives’ pre-election budget was full of fiscal fictions, based on over-inflated revenue projections," said Mason. "Then they spent the entire election promising new infrastructure and programs that Albertans now know they can’t pay for under their current fiscal framework."
The provinces losses were partially offset by higher than expected corporate income tax, stronger investment income and increased revenue from gaming and liquor.
The province also spent $293 million more than expected in the first six months of the year due to forest fires and severe hail storms.
The province is still on track for a deficit of between $2.3 billion and $3 billion this year, said Horner.
However he remains optimistic for a recovery.
Business investment, consumer spending and employment gains are all on pace for significant growth with Alberta leading the country in many categories, Horner said.