With a massive glut in global oil reserves conspiring to keep commodity prices low, Alberta’s NDP government is developing strategies for how the province will deal with the crippling fiscal impacts it now faces.
“Right across Canada, and particularly here in Alberta, families and communities are feeling the impact of lower oil prices,” said Finance Minister Joe Ceci, speaking at a press conference in Edmonton last week. “As I’ve said before, we cannot control the steep decline in commodities prices. What we can control is how we respond. We’ll continue our work to find efficiencies, but these savings will not come at the expense of programs and services that Albertans need. This would only make a bad situation worse.”
Not surprisingly considering prevailing market conditions, Ceci struggled to identify any silver lining for the province’s revenue projections with regard to oil and gas royalties as it prepares to deliver the 2016 budget.
“We’re in the process of getting projections now for oil. We’re dealing with updated projections — we will be hearing those fully of course in Budget 2016. Certainly this downturn has caused some weakening in the income tax we’re going to be projecting out, and we have to manage that — we know what the revenue side of our ledger is starting to look like, but we know we must look more fully at the expense side of our ledger moving forward.”
The announcement last week by a municipal coalition in Quebec that it would oppose development of TransCanada’s Energy East pipeline project through that province wasn’t adding any financial rainbows to the crisis facing Alberta’s primary industry in early 2016.
“I know Canadians know that access of this commodity to tidewater, getting it to world prices, is critical in terms of the entire country, our gross domestic product, not only in this province but the country,” said Ceci. “Pipeline access would put people back to work and help the fortunes of the entire country. I’m not surprised in some ways, but I am disappointed. I believe we can work through these things. Pipeline access is the safest and most efficient and effective way to transport oil, and I think that Quebec would know that better than most places.”
Ceci assured the NDP will view pipeline development and industry recovery as top priorities in 2016.
“Premier Notley led, and was successful in getting a national energy strategy approved by the premiers in this country. I think that’s a good first step. A next good step would start to see regulatory approvals for pipelines. I think that approach is better than others that haven’t been successful in the past. I certainly will be a champion for pipelines, and have been.”