* Redford says 2013-14 revenues to be short by C$6 bln
* Deep discounts on heavy crude hit province's coffers
* Notes Alberta still wants new roads, hospital
By Jeffrey Jones
CALGARY, Alberta, Jan 24 Alberta's premier
warned on Thursday that the Western Canadian province faced a
C$6 billion ($6 billion) shortfall in revenue due to deeply
discounted prices for its crude oil but offered no specifics on
how to prevent falling deeper into the red.
Alberta's financial forecasts have been thrown into disarray
by fast-growing output from its vast oil sands and limited
pipeline capacity to move it to markets in the United States and
elsewhere. That has pulled the price of a barrel down to less
than half that of international benchmark Brent oil.
The situation has prompted Premier Alison Redford and her
government to warn of a tough budget on March 7, and raised
questions about her ability to meet a promise of erasing its
budget deficit in the upcoming fiscal year.
In an eight-minute televised address, Redford explained the
reasons for the sharply reduced take from Alberta's biggest
industry and pledged not to raise taxes to make up the
difference, but did not say where she will cut spending.
In fact, she made note of strong desire in the province of
3.8 million people for new roads, schools and healthcare
"Despite falling oil revenues, I give you my commitment that
as we deliver our long-term economic plan for Alberta, we will
be thoughtful in our approach and we will deliver on these
priorities," she said.
Alberta is Canada's largest oil-producing province and the
largest foreign energy supplier to the United States, and had
become used to boom times until the oil market weakened last
Redford has been an enthusiastic promoter of TransCanada
Corp's contentious Keystone XL pipeline, which would
carry Alberta's crude to refineries in Texas.
The project took a series of steps forward this week as the
governor of Nebraska approved a new route for the long-delayed
project through the state and 53 U.S. senators urged U.S.
President Barack Obama to approve it. However, Obama's decision
is not expected for several months.
Alberta is considering a host of other potential routes to
new markets that could lead to higher returns, but Redford
cautioned that long-term solutions will not be quick.
In the meantime, Alberta, which derives 30 percent of its
overall revenue from the oil industry, will be C$6 billion short
of its revenue target for the upcoming fiscal year, she said.
Recently, the bitumen crude from the oil sands has sold for
more than $40 a barrel below U.S. light crude, leading the Bank
of Canada this week to also point out the national economy was
feeling the effects as well.
"It will take focus and determination over the next several
years to open new markets. And that is job one for my
government," Redford said.
The Progressive Conservative government, in power since 1971
and re-elected last year, is being pilloried by its opponents
for forecasts they say that have been far too rosy, for relying
too heavily on the fortunes of a highly cyclical industry and
for tapping debt markets.
"It doesn't do any good to talk about how we might have
pipelines four or five or six years from now," said Danielle
Smith, leader of the opposition Wildrose Party. "What is the
plan over the next three or four or five years to get us
accustomed to this new reality of lower energy prices and lower
Redford was vague as she cautioned about upcoming spending
cuts in programs and services "that are not sustainable over the
"Quite simply, we have to put Alberta's finances on a more
stable footing. A province as prosperous as Alberta should not
be as susceptible as we are to swings in the price of oil and