The province of Alberta raised its forecast for the price of oil, which may help to narrow its annual budget deficit, Finance Minister Doug Horner told reporters today.
West Texas Intermediate crude will average $94.81 a barrel in the fiscal year that began April 1, budget update documents show. The price of Western Canada Select, the benchmark heavy crude exported from Alberta to the U.S., will average C$74.51 a barrel ($70.89), up from an earlier forecast of C$68.21. Alberta predicted its deficit will range between C$1.2 billion to C$2 billion this year, from a previous estimate of C$1.98 billion.
“First-quarter operational revenue was up thanks to rising energy prices,” Horner told reporters on a call from Edmonton, referring to the three months that ended June 30.
Higher rail shipments of oil are mitigating a shortage of export pipelines that reduced Alberta crude prices and helped widen the spread between WCS and WTI crudes to a record $42.50 a barrel in December. The spread has averaged $21.51 a barrel this year, according to figures compiled by Bloomberg.
The provincial government is still assessing the budget impact of reconstruction spending from record June flooding in southern Alberta and has spent C$148 million to date of an initial C$1 billion it committed for relief, according to documents. The government estimated the total bill to the province, federal government and insurance companies from floods at about C$5 billion.
Alberta gets about one-third of its revenues from royalties and taxes on oil and natural gas production.
The province did C$494 million of direct borrowing in the first three months of the fiscal year, compared with the C$798 million forecast in the budget.
Economic growth in 2013 will be 3.1 percent, the government projects, up from the prior 2.9 percent outlook.