Alberta Projects $2 Billion Surplus as Oil Prices Rise

Alberta will record a surplus of $2 billion for fiscal year 2026–27 driven by increased global oil prices, reversing earlier predictions of a $9.4 billion deficit, according to the province’s 2026 first quarter fiscal update.

Alberta Finance Minister Jason Nixon announced on Aug. 27 that the province’s budget would be balanced for the sixth year in a row.

“Alberta’s focus remains on responsibly managing our finances, diversifying our economy, and ensuring services are available when Albertans need them,” he said on social media.

The provincial government saved $225 million in debt servicing costs as a result of reduced borrowing, Nixon said, adding that the Heritage Fund—which uses oil revenues to make long-term investments for Albertans—is set to reach $35 billion by 2027.

“Alberta has been given an opportunity and Alberta’s government will not waste it,” he said.

The first quarter fiscal update released Aug. 27 showed an $11.4 billion improvement compared to the $9.4 billion deficit estimated in Alberta’s Budget 2026 in February. The improvement included a $9.7 billion jump in non‑renewable resource revenue as West Texas Intermediate (WTI) crude averaged US$73.50 a barrel.

The province had projected in Budget 2026 that it would see $74.6 billion in revenue and $83.9 billion in spending for 2026–27, which would have been Alberta’s largest shortfall since the COVID-19 pandemic. Instead, the fiscal update provided a new forecast of $86.3 billion in revenue and $84.2 in spending for the fiscal year.

Global energy prices have risen since the United States and Israel launched a military operation against Iran in late February, prompting Tehran to target vessels in the Strait of Hormuz, a crucial passageway for approximately 20 percent of the world’s oil supplies prior to the onset of the conflict.

The U.S. military has been providing active naval escorts for oil tankers through the strait for approximately three to four months, with operations ramping up significantly since May.

Yemeni’s Iran-aligned Houthi terrorist group has also declared a maritime blockade against Saudi Arabian shipping through the Red Sea and attacked several ships attempting to transit the Bab el-Mandeb Strait, another critical passageway for global commerce and energy shipments. Several oil and gas facilities in the Middle East have also been damaged by Iran and its Yemeni Houthi allies.

Alberta NDP MLA and finance critic Court Ellingson criticized the state of the economy on Aug. 27 after Nixon’s announcement.

“A surplus is great, but economic growth only matters if people can actually feel it in their daily lives, and today, families are still struggling,” he said. “Rent, utilities, groceries, and property taxes continue to outpace wage growth, putting enormous pressure on household budgets.”

Tariffs

Some politicians, like Ontario Premier Doug Ford, have called on Canada to consider tariffs on energy exports to the United States as a response to Washington imposing new 50 percent tariffs on Canada. Alberta Premier Danielle Smith has rejected this proposal, calling it “disastrous.”

Smith said that since Canada exports some four million barrels of oil a day to the United States, imposing 50 percent counter-tariffs on energy could prompt Washington to retaliate with even steeper tariffs on Alberta’s oil and natural gas that travel through the United States to Ontario.

She said this could cause severe economic damage across Canada, particularly in Alberta, Ontario, and Quebec, and could encourage U.S. refineries to find alternative sources of heavy crude.

Prime Minister Mark Carney and Smith signed an energy agreement in May that would potentially pave the way for construction of a new pipeline to the West Coast to start as early as September 2027. Alberta officials said the pipeline would be capable of shipping over 1 million barrels of oil per day to Asian markets and was expected to be completed no later than 2034.