Alberta Finance Minister Doug Horner said the province’s deficit for the fiscal year that began on April 1 will be higher than previously projected on lower revenues from oil and natural gas.
The deficit will be between C$3.5 billion ($3.5 billion) and C$4 billion, compared with a previous forecast of C$2.3 billion to C$3 billion, Horner told reporters in a quarterly fiscal update from Calgary today. Alberta collected C$2.4 billion less royalties and taxes on resources in the nine months through Dec. 31, Horner said.
Alberta’s “bitumen bubble,” the gap between Canadian and U.S. oil prices, could persist for as many as three more years, Horner said. “It is a bubble that’s not going to pop anytime soon and it’s costing us a lot of money.”
Canadian crude prices have fallen as pipeline bottlenecks limit markets for rising volumes of oil from Canada. Western Canada Select crude fell to a record $42.50 a barrel less than West Texas Intermediate oil on Dec. 14, according to figures compiled by Bloomberg. The gap was $25 a barrel today.
To cope with declining resource revenue, the province will cut the number of public-sector managers by 10 percent and freeze salaries, Horner said.
“We’re seeing declining resource revenues in Alberta and they are, for the most part, a result of Alberta’s market access problem,” Horner said. The province forecasts saving C$54 million from the pay freeze and didn’t provide a figure for the roughly 480 jobs to be cut.
The province recorded a deficit of C$1.98 billion during the first nine months of the fiscal year that began on April 1, Horner said. Alberta will present its 2013-14 fiscal plan on March 7.