Alberta remains an economic area of prosperity, but slow downs and caution is in the air. Much of the update had to do with the changes in Oil and Gas Royalties. Oil and Gas is the main economic driver for the province. Oil prices have declined from a peak of US$147 per barrel in July to a low of US$56 in November. Things were looking quite rosey when oil was at the $140/barrel number, then as we all know the markets seemed to go in chaos. Oil dropped sharply. Thankfully we had 8 months of strong revenues helping us to distribute the wealth across Alberta. Seeing the market crash as it did the Province is now instituting measures to create confidence in drilling and other key areas.
Alberta quarterly budget update highlights:
Surplus. $2 billion, a decrease of $6.5 billion from the first quarter forecast, but $435 million higher than the budget estimate.
New wells drilled after January 1, 2009 get a one-time option of selecting new transitional royalty rates. By helping ensure companies have access to the cash flow they need to invest in new projects, this five-year program is aimed at encouraging the development of new drilling projects and keeping thousands of Albertans at work.
2008-09 Capital Plan spending is forecast at $8.8 billion, $83 million higher than budgeted but $170 million less than forecast in the first quarter. The decrease from the first quarter forecast is primarily due to changes in the construction schedules of projects.
Community Facilities - $403 million, a decrease of $123 million from budget, due to changes in the construction schedule of the Royal Alberta Museum project.
Water and Wastewater Management - $341 million, $81 million higher than budget estimate.
Housing - $411 million, $2 million higher than the budget estimate, due to Capital for Emergent Projects transfers.
Government Facilities, Equipment and Other Capital - $887 million, $118 million higher than budgeted.
Capital for Emergent Projects - $131 million, $1 million higher than budgeted.
Provision for Capital Cost Escalation - $282 million remains unallocated, while a net $27 million has been allocated, mainly for school and health projects.
Download the detailed report published by the Alberta Government here.
the federal throne speech was quite lack lustre and offering little yet. Look for more changes in the new year.
The result is Albertans are still working. While some projects have been scaled back the projects announced at the start of the year are proceeding. The governement is taking action to ensure that drilling continues. A look at Oil price history tells us that the price per barrel of Oil in 2005 was $50.09, 2006 was $58.30, 2007 was $64.20 compared to today's value of $53.62. Definitely a step backwards yet still at levels where we experienced tremendous economic growth. While the explosion may be over it's too soon to see if we are on a plateau or we too are experiencing a gradual economic downturn.