Alberta's fiscal outlook 'changed dramatically' as higher oil prices could erase $9.4B deficit
With WTI crude averaging over $70 per barrel instead of budgeted $60.50, economists project a modest $5 billion surplus if prices hold through fiscal year-end.
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Alberta's fiscal outlook has swung dramatically in recent months as higher-than-expected oil prices put the province on track to erase a projected $9.4 billion deficit and potentially finish the year with a surplus, economists say.
When then-finance minister Nate Horner introduced Alberta's 2026 budget in February, it estimated West Texas Intermediate crude would average $60.50 US per barrel. Instead, oil prices have spent much of spring and summer over $70 US, even topping $100 US amid heightened tensions between the United States and Iran.
"As it looks right now, we are on track for a pretty modest surplus of something on the order of about $5 billion, if this high, $70 per barrel price holds," said Trevor Tombe, an economics professor at the University of Calgary. That represents roughly a $14 billion swing in provincial finances in just a few months.
The province's finances remain closely tied to oil prices because resource royalties account for a large share of government revenue. According to the budget, every $1 shift in oil prices increases provincial revenues by roughly $680 million over a full fiscal year.
However, economists caution it's premature to assume a surplus is guaranteed. "A surplus depends both on revenue and on spending," Tombe said, noting that the government's affordability rebate, decreases in other revenue sources, and trade disruptions with the United States remain uncertainties. "Nothing is guaranteed until the end of the fiscal year."
The province said it would update its projections, if necessary, in its next quarterly report at the end of August.
The facts
What was Alberta's original oil price assumption in the 2026 budget?
Alberta's February 2026 budget estimated West Texas Intermediate crude would average $60.50 US per barrel.
What is the projected fiscal swing from higher oil prices?
Alberta could swing from a projected $9.4 billion deficit to a modest $5 billion surplus if oil prices hold at around $70 US per barrel, representing roughly a $14 billion change in provincial finances.
How much does each $1 change in oil prices affect Alberta's revenues?
Every $1 shift in oil prices increases Alberta's provincial revenues by roughly $680 million over a full fiscal year.
When will Alberta update its fiscal projections?
Alberta said it would update its projections, if necessary, in its next quarterly report at the end of August.
