The province of Alberta ended the 2016/2017 fiscal year with a deficit of $10.78 billion, $263 million higher than the 2016 budget estimate of $10.52 billion as the government had to contend not only with low oil prices but the impact of the Wood Buffalo wildfire.
The deficit in the government’s annual report also includes accounting treatments related to the $1.1 billion for future coal transition payments and $2 billion from the Balancing Pool, both at the recommendation of the office of the Auditor General. Neither item had an impact on actual spending but both count toward the deficit.
Total non-renewable resource revenue was $3.1 billion, an increase of $308 million from $2.79 billion in 2015/2016 and $1.73 billion above the $1.36 billion in Budget 2016.
The year-over-year increase was primarily due to the impact of higher oil prices on bitumen royalties which contributed $1.48 billion in 2016/2017, up $827 million from the $656 million estimated in the budget.
West Texas Intermediate (WTI) averaged US$47.93/bbl in 2016/17, up $5.93/bbl from the forecast of $42/bbl for 2016/2017 and an increase of $2.93/bbl from an average of $45/bbl in 2015-16.
Western Canadian Select (WCS) heavy oil averaged C$44.67/bbl for the year, up $3.81/bbl from the previous year. Although the average light-heavy differential of US$13.93/bbl was slightly wider (53 cents), the higher oil prices muted any impact.
The increase from budget was due mainly to higher oil prices, a narrower differential and substantially lower industry costs, partly offset by a higher U.S. Canadian dollar exchange rate, lower oil and natural gas production and natural gas prices.
The U.S.-Canadian dollar exchange rate averaged US76.2 cents/C in 2016/2017, a decrease of 2.7 cents from the Budget 2016 estimate.