Rise in oil prices could help trim deficit: Notley

As oil prices hit their highest level in nearly four years, Premier Rachel Notley says she’s not counting on windfall energy revenues for her NDP government.

But the premier suggested additional oil royalties could be aimed at reducing a deficit projected at $8.8 billion for the current fiscal year.

While prices fell back slightly Friday, the price of benchmark West Texas Intermediate crude has recently topped US$71 a barrel, its highest level since the fall of 2014.

Notley told reporters the government reviews prices on a weekly basis, but “it’s far too early ” to bank on additional revenue.

“What we know from our experience is that right now, the price of oil is a bit higher, but we don’t know how long that will last. We don’t know how long the shrinking differential will last. We don’t know how long the lower dollar will last,” she said at the ribbon cutting for the new maternity ward at the Peter Lougheed Centre.

“What I know is, you look at this and you stay the course and you don’t make plans for money that you don’t have yet.”

Asked what her priority is for any additional money that does flow into government coffers, however, Notley said she is looking at the province’s bottom line.

“We need to focus on bringing our budget back into balance and we need to focus on a responsible and sustainable level of government

spending that becomes less and less reliant on oil and gas dollars,” she said.

The NDP government, which took office in 2015 as oil prices were plunging, posted deficits of more than $10 billion in each of the last two fiscal years. This year’s shortfall, and a plan to balance the books by 2023, have drawn harsh criticism from the Opposition United Conservative Party.

Higher oil prices that stick around for a while could help dent the $8.8-billion deficit, however.

The NDP’s 2018-19 budget is based on an assumption of West Texas Intermediate averaging US$59 a barrel for the year.

Every dollar change to that average is worth $265 million in revenue for the province.

The discount between West Texas Intermediate and the bitumenblend Western Canada Select sat at US$19.73 on Friday, compared to the budget’s assumed average of $22.40.