Alberta cuts growth forecast in face of Canadian oil crash
Alberta is officially labelling the discount on Canadian crude a “national crisis.”
“It is a crisis, of course, and that’s why we’re taking action,” Alberta Finance Minister Joe Ceci told BNN Bloomberg on Friday.
“That’s why the premier announced the crude-by-rail plan we are going to undertake on our own, if we have to,” he added. “We really see this as a national crisis that the federal government should be participating in.”
Alberta trimmed its 2018-19 deficit forecast to $7.5 billion in its second-quarter fiscal update on Friday, mainly due to higher-than-expected revenue from personal income taxes and $1.3 billion more than predicted in bitumen and crude oil royalties.
But those numbers are predicted to weaken as the discounted price of Canadian oil weighs on the provincial economy. Western Canadian Select was trading at a US$28.49 discount to WTI as of 2:40 p.m. on Friday.
Ceci said every Albertan is fully aware of the gap.
“You don’t have to go very far to ask a citizen here: ‘What’s the differential? What’s WTI? What’s WCS?’ and they know it off the top of their head because it is top of mind,” he said.
Ceci called on the federal government to step in with the assistance he believes would already have been provided to other Canadian provinces or industries.
“If this were a different part of the country, if this were a different sector – like an auto sector, or Bombardier – I think the feds would be there with all hands on deck,” said Ceci.
“I feel disappointed that they’re not jumping to help Albertans and the national economy out with trying to look at what levers we can pull together to reduce this differential and improve this situation.
Alberta Premier Rachel Notley told BNN Bloomberg on Thursday that she’d stop short of saying the level of discontent in the province is “threatening Confederation,” but she did say that the government’s job in alleviating the production glut in the energy industry is “not done yet.”
Ceci said that the frosty reception that Prime Minister Justin Trudeau and Finance Minister Bill Morneau received on their visits to Calgary last week should indicate to the feds that Western tensions are building.
“There were Albertans in the streets of Calgary, blocking off roads, showing their disappointment and frustration with the lack of action coming from Ottawa,” he said. “I don’t know if you call that Western alienation. On this file, I call it not attending to what needs to be done to shrink the differential.”
Alberta is investing in more rail cars to increase its export capacity and Notley recently appointed a three-person expert panel to examine ways to lessen the discount – including possible production cuts mandated by the province.
Ceci said the problem needs to be fixed soon, for the benefit of the Canadian people and its economy.
“We need to get world international prices and what we’re getting now is pennies on the dollar,” he said. “And the only people making out like robber-barons are people in the United States.”