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November 29, 2004 Strong energy revenue pumps up province's bottom line Highlights of second-quarter fiscal report:
Edmonton… On-going strength in oil and gas prices continue to improve the province’s fiscal outlook for 2004-05. Total revenue is $5.7 billion higher than estimated in the budget, while total expense is $1.9 billion higher than budgeted. Finance Minister Shirley McClellan laid out the numbers in the Second Quarter Fiscal Update released today. The update is a forecast of the province’s finances through the end of fiscal 2004-05. “High energy prices have helped increase our revenue considerably, but some of that money has been used to address BSE, forest fires, floods, and natural gas rebates,” said McClellan. Resource revenue is forecast to be $9.6 billion. That is $4.8 billion higher than the budget estimate and $1.7 billion higher than estimated in the First Quarter update. The government is now basing its revenue projections on annual prices of US$42 per barrel for oil, and Cdn$6.85 per thousand cubic feet (mcf) for natural gas. For the first eight months of this fiscal year, oil prices have averaged US$43.50 per barrel and natural gas prices have averaged Cdn$6.50 per mcf. Total revenue is $28.6 billion and total expense is $24.5 billion that leaves a surplus of $4.1 billion. Of that, $3.7 billion will be used to pay off the remaining accumulated debt as promised by government last July. “There has been a lot of speculation about the size of Alberta’s surplus,” added McClellan. “But with such a large amount already earmarked for the debt this fiscal update puts things into perspective.” Transfers from the Sustainability Fund are forecast to provide $630 million in assistance related to the BSE crisis, $124 million to fight forest fires, and $76 million for flood disaster relief. The government is also expecting to provide $359 million for natural gas rebates this winter, an increase of $74 million from first quarter. As was announced in the First Quarter Fiscal Update, $709 million has been earmarked for health, education, seniors and other initiatives. “We’re very fortunate to live in a province in which we do have money set aside for unforeseen situations,” said McClellan. “But we have to balance between ensuring Albertans’ priorities are met, and making sure we live within our financial means.”
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