As concerns rise to extreme oil price because of the war IranCanada's oil-producing provinces could actually see their revenues increase.
The price of a barrel of crude exceeded $73 early Monday morning, compared to less than $64 on February 26. By Tuesday afternoon, that figure had risen to around $74.83.
For Alberta, which is projecting a deficit of $9.4 billion for the 2026-27 fiscal year, changes in oil prices could mean a decline in this important figure.
“If prices stay in the 70s, our deficit could fall to around $3 billion, which would be helpful,” said Richard Masson, former president and CEO of the Alberta Petroleum Marketing Commission.
“But we don’t know what’s going to happen so I’m not counting on that yet.”
In its budget, Alberta projected that the price of West Texas Intermediate oil, considered the vital benchmark for the province's economy, would average $60.50 a barrel during the next fiscal year.
Alberta Finance Minister Nate Horner told reporters at the budget release that if oil prices remained low indefinitely, the structural deficit would become “extremely evident.”
It's difficult to predict an exact estimate, but Alberta Premier Danielle Smith told reporters Monday that change is possible from the estimated $4.1 billion deficit for the current fiscal year.
“I suspect that instead of the $4.1 billion deficit that we projected in the budget, it might be slightly less than that,” Smith said.
A day later, Horner told reporters that a prolonged period of high oil prices would be beneficial.
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“An additional month of high prices would have a dramatic impact,” he said Tuesday. “I don't want to speculate on how much it will change things this year, but we know it will help, we know we're on the right side.”
It will depend on how long the price rise lasts, Horner said, and if it stays at this level it would “help the books”.
Trevor Tombe, an economist at the University of Calgary, said it's common that when an important item produced by a province sees its price increase, it's a good economic story.
“Ultimately, a lot of the resources we produce in Canada belong to provincial governments,” he said.
“So when the value goes up, that means more revenue for the government and the effect can actually be huge. »
Tombe said that in Alberta's case, each dollar of change per barrel equates to about $680 million to the government's bottom line.
With a price of $74 per barrel of crude, about $14 above the provincial estimate, that could mean $30 million a day to the government's bottom line.
He added that if this continues for March, it could equate to $1 billion for the final month of the 2025-26 fiscal year.
“It basically means that if this holds, sure for a whole year, and who knows what the future holds, but if it holds, the budget could very well be balanced,” Tombe said.
Next door, in Saskatchewan, another oil-producing province, the impact may be different.
In last year's budget, the province estimated oil and gas revenues at $1.1 billion. He also estimated the oil price at US$71 per barrel in the 2025-26 budget.
“The price of oil has jumped in the last few days, no one predicted that a month ago,” said Saskatchewan Finance Minister Jim Reiter.
Reiter stressed to reporters that the province has tried not to rely too heavily on natural resources and that remains the goal.
Tombe noted to Global News that the province is less dependent on oil than Alberta, but he estimated an equivalent change for Saskatchewan would amount to about $800 million.
“Oil prices are important for Saskatchewan, but the magnitude of the effect is much, much smaller than in Alberta, which means…they're not facing the same kind of volatile budget as Alberta,” he said.
Saskatchewan's finance minister said any budget-specific matters would be deferred until budget day, March 18.
Even though high oil prices could boost provincial budgets, ordinary Canadians could still be hit hard, both at the gas pump and in their wallets, Tombe warned.
“When the price of everything we buy increases, it decreases our purchasing power,” he said. “The rise in oil prices that we're seeing now, if it lasts, we could very well see inflation rise.”
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