Calgary/CMEDIA: Eversince the province tabled its budget in February with higher-than-expected oil prices, Alberta’s fiscal outlook has shifted to erase a projected $9.4-billion deficit and potentially finish the year with a surplus.
“It’s changed dramatically,” said Trevor Tombe, an economics professor at the University of Calgary.
When Nate Horner, then-finance minister introduced Alberta’s 2026 budget, it estimated West Texas Intermediate (WTI), the North American benchmark crude, would average $60.50 US per barrel during the fiscal year.
Instead, oil prices during much of spring and summer have seen over the $70 US range, even topping $100 US a barrel amid heightened tensions between the United States and Iran.
“As it looks right now, we are on track for a pretty modest surplus of something on the order of about $5 billion, if this high, $70 per barrel price holds,” Tombe said.
That represents roughly a $14-billion swing in the province’s finances in just a few months, Tombe said
Since the province’s finances are closely tied to oil prices as resource royalties account for a large share of government revenue used to fund public services.
“The budget is incredibly sensitive to every $1 change in the price of oil,” Tombe said.
According to the budget, every $1 shift increases provincial revenues by roughly $680 million over a full fiscal year.
A $100 affordability rebate for Albertans announced by the United Conservative government to help offset higher gasoline prices as oil prices have climbed, Alberta’s financial outlook has improved.
But economists caution it’s far too soon to assume Alberta will finish the fiscal year in the black.
“A surplus depends both on revenue and on spending,” Tombe said and added,
“We’ve had this affordability measure, for example…The world’s an uncertain place. Trade disruptions with the United States are a negative for Alberta as well. Nothing is guaranteed until the end of the fiscal year.”
“Given the volatility of oil markets and Alberta’s continued economic growth and success, we anticipate improvements from the projected $9.4 billion deficit in Budget 2026,” said Juliana Rodriguez, press secretary for Finance Minister Jason Nixon, in a statement.
“However, we have only been in this fiscal year for just over three months, and we cannot base projections for the entire 2026–27 fiscal year on recently elevated oil prices.”
She said the province would update its projections possibly in its next quarterly report at the end of August.
Volatile markets could change the picture
Tombe said the biggest risk remains the volatility of oil markets.
“They’ve risen over the past few months. They could very well fall over the next several months.”
Tombe said if oil prices average below about $68 US a barrel for the rest of the fiscal year, Alberta could end the year back in a deficit.
“Nothing is guaranteed in terms of the current fiscal outlook for the province. So we really shouldn’t be counting our fiscal chickens before they hatch next year.”
