Alberta Just Gifted $3,500,000,000 By OPEC+
The OPEC+ countries decided on Wednesday to significantly cut oil production by 2 MILLION BARRELS PER DAY to support oils prices that had fallen from recent peaks. This is the largest cuts in about 2 years and during a time when most of the world is seeing huge inflation and many countries like England and German are struggling with very high heating costs, even before winter starts. Oil supply will likely be cut back further when a European ban on most Russian imports takes effect in December and the Group of Seven Countries impose a price cap on Russian Oil.
Immediately after the OPEC announcement, the price of WTI Crude Oil jumped by $7 from $77/barrel to over $84/barrel now. Overall this is terrible news for every consumer and especially those already struggling with high costs.
The city of Calgary and Alberta are one of the few winners from this decision because every $1-per-barrel jump in WTI oil prices increases provincial revenues by $500 million. So OPEC+ just gifted the province of Alberta $3.5B! A little over a year ago Alberta posted a $17B deficient, now they are forecasting a $500M surplus which will grow to a surplus of $12-$13B if oil stays around $100/barrel. Which other province is running a massive surplus right now? Alberta’s debt per resident is already the lowest of any province in Canada and they are planning to use the surplus to pay down their deficit! They already have no provincial sales tax - how much better can it get for residents there??
The Calgary economy has been heavily diversifying away from oil and gas since the last crash in 2014/15 but oil royalties are still an important source of revenue for the city and province. You likely won’t see significant expansion of the oil sands ever again but you are seeing a massive expansion of the work force in Calgary into all different areas of the economy: technology, green energy, manufacturing, telecommunication + more.
No wonder people are flocking to Alberta.
