Alberta's surplus was announced in Finance Minister Nate Horner’s year-end fiscal update on Friday.JASON FRANSON/The Canadian Press
Massive oil and gas revenues driven by strong global crude prices and record production helped Alberta end the 2024-25 fiscal year with an unexpected $8.3-billion surplus.
The surplus, announced Friday in Alberta Finance Minister Nate Horner’s year-end fiscal update, was roughly $8-billion higher than the province predicted in its February budget, and $4-billion more than the previous fiscal year. Non-renewable resource revenues alone were $4.7-billion higher than the province had forecast.
Along with strong oil prices, the province’s fossil fuel sector benefited from the opening of the expanded Trans Mountain pipeline system, which significantly increased the price of Alberta’s heavy oil. A lower exchange rate also propelled higher returns for the sector, as did oil production climbing to a record high of almost four million barrels a day.
The financial results came off the back of a nine-year high in sector spending to develop oil, gas, hydrogen, geothermal, helium and lithium resources in 2024, as well as a significant increase in oil and gas reserves estimates.
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At the heart of the windfall are solid oil prices and increased demand for the heavier crude supplied by Alberta’s oil sands.
The price of West Texas Intermediate oil, a North American benchmark, averaged $74.34 per barrel over the year, slightly higher than the $74 per barrel forecast in last year’s budget. And while that price was lower than in 2023-24, it was offset by Trans Mountain’s influence, which narrowed the difference between Canadian and U.S. pricing.
Alberta’s natural resource sector presents a financial opportunity unlike any other province, Mr. Horner said Friday, but he acknowledged it comes with a bevy of uncertainty.
That’s why it’s important to conservatively forecast oil prices, he said, and manage downside risk as much as possible.
“We have to spend wisely in the good years, and that allows us to not have to react too quickly and cut spending in a deficit year,” he said.
“But truly, it’s a blessing to have this unique challenge around our revenue, and it gives a great opportunity to all Albertans to be paying less taxes and keeping more money in their pockets.”
That means, however, that Alberta’s revenue streams are subject to significant volatility. Oil prices in particular are affected by global supply and demand, and have been unstable in recent years due to geopolitical tensions and economic pressures around the world.
But the province’s coffers remain highly dependent on revenue streams that are subject to significant volatility, particularly non-renewable resource royalties, noted the government’s annual report.
One example of how Alberta’s reliance on oil prices can cause a significant swing in numbers is the deficit.
In last year’s budget, the province projected a surplus of around $400-million. Instead, Alberta ended the fiscal year with a $8.3-billion surplus.
Time will tell how much the resource revenue roller coaster affects the deficit next year, which the government pencilled in at $5.3-billion in last year’s budget.
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In the 2024-25 fiscal year, Alberta’s total revenues hit $82.5-billion, $8.9-billion more than the budget and $7.7-billion more than 2023-24.
Strong corporate profits in the oil and gas sector contributed to the windfall, thanks in part to the U.S.-Canadian dollar exchange rate. It averaged 72 US cents in 2024-25, four cents lower than estimated in the budget and two cents lower than the 2023-24 average. Since oil is priced in U.S. dollars, the lower exchange rate boosted the Canadian dollar revenue.
Bitumen and conventional oil production volumes rose by 37 per cent and 10 per cent from the budget, respectively. That brought bitumen royalties to $17.2-billion – $4.6-billion more than the budget and $2.6-billion higher than in 2023-24. Conventional crude oil royalties were $3-billion in 2024-25, $300-million higher than the budget and very close to 2023-24.
Natural gas and byproduct royalties were $1.2-billion, up $200-million from 2023-24 and down $200-million from budget, due to fluctuations in oil and gas prices.
Real GDP rose an estimated 2.7 per cent last year. The energy sector led Alberta’s growth in business activity and output with activity ramping up in the second half of the year.