- Finance Minister Toews is preparing to form a revenue panel to examine all options.
- The Alberta government’s second-quarter fiscal update, released on Tuesday, contains both good and bad news.
The good news is that the province’s economy appears to be turning the corner toward recovery.
The bad news is that, the path could turn out to be a dark alley where COVID-19 and its gang of variants are waiting with billy clubs and machetes to greet our economic recovery.
That’s the problem with making economic predictions in the age of COVID: the pandemic stubbornly refuses to listen.
Last Friday, global oil prices fell by more than 10% after COVID’s latest variant, omicron, sparked fears of reintroduced travel restrictions, undermining the oil market’s recovery. “Oil prices are volatile, as we see today,” Toews said, understatedly. “Furthermore, large fluctuations can be difficult to predict. Albertans have been living this story for decades, but it has become more acute in recent years.”
And, no matter how nauseating the ride, we will be tossed around in that fluctuating energy-price roller coaster for years to come.
When oil prices increase, as they have this year, the ride can be thrilling. Indeed, Albertans are experiencing a good kind of oil-price whiplash as royalties from nonrenewable resources, primarily oilsands bitumen, pour in.
The provincial treasury is on track to receive nearly $11 billion in nonrenewable resources this year, increasing almost $8 billion over the original 2021-22 budget documents tabled last February. Unfortunately, we are still suffering from more bad whiplashes than good on this roller coaster ride, which turned into the Drop of Doom in 2015 when oil prices fell off a cliff and again in 2020 when oil prices briefly fell into the grave.
The provincial deficit, which was previously projected to be $18 billion, is now expected to be less than $6 billion. That’s a sizable and welcome drop of $12 billion, but it’s almost entirely due to increased oil revenue.
Even as it touts oil’s prospects, the government attempts to diversify the economy, and there are rays of hope. Amazon Web Services intends to invest $4.3 billion in a cloud computing center near Calgary by 2037.
Source: CBC News