Alberta’s fiscal fortunes have taken a dramatic turn.
The province’s first-quarter fiscal update projects a surplus of more than $2 billion, a stunning reversal from the $9.4 billion deficit forecast in Budget 2026.
Surging oil revenues are driving the turnaround.
Natural resource revenue is up $9.7 billion, helping push total revenue $11.7 billion above budget.
“This is good news for Alberta and for Alberta’s future,” Finance Minister Jason Nixon said Thursday.
“It means we’re on the path to the province’s sixth consecutive surplus year.”
However, Nixon warned the government won’t treat the oil-fuelled windfall as permanent.
“We know energy prices are volatile, and we cannot budget on the expectations that high oil prices will last,” he said.
Alberta now assumes WTI will average US$65 per barrel, after averaging roughly US$88 from April to August.
Every US$1 change in oil prices swings provincial revenue by about $680 million.
Nixon attributed much of the turnaround to higher oil prices driven by the war in Iran.
“The $11.4-billion shift from Budget 2026 is primarily driven by non-renewable resource revenues fuelled by the Iran war, pushing oil prices significantly higher,” he said.
Despite the windfall, Alberta isn’t planning to pour the projected surplus into new programs, debt repayment or the Heritage Savings Trust Fund.
Nixon instead repeatedly preached caution, warning against repeating past governments’ mistakes during energy booms.
“Let’s take the success that we’re seeing, but let’s make sure that we don’t create structural challenges across our budget that, in the long term, are going to create bigger deficits and will hurt Albertans,” he said.
A weaker loonie is also helping, with every one-cent drop adding roughly $440 million in provincial revenue.
However, the projected $2 billion budget surplus doesn’t mean Alberta is swimming in cash.
Despite the projected surplus, Alberta remains $4.3 billion short of a cash surplus due largely to the timing of royalty payments, capital spending and accounting adjustments.
Nixon warned against mistaking the oil windfall for a permanent trend.
“Despite this projected surplus, Alberta is not yet in a cash-surplus position,” he said, adding fiscal responsibility remains a top priority.
Oil isn’t the only bright spot.
Income tax revenue is also up $1 billion on stronger corporate profits and population growth, while manufacturing has recovered to pre-2025 levels.
Alberta’s population is forecast to grow 1.2 per cent through 2026 and 1.4 per cent in 2027.
Manufacturing has also recovered to pre-2025 levels, while reduced Chinese duties have helped boost canola exports.
Alberta raised its inflation forecast from two per cent to 2.6 per cent, with higher oil prices and potential Canada-U.S. counter-tariffs adding pressure.
Nixon warned counter-tariffs “could create significant inflation,” though Alberta remains relatively insulated as energy exports have largely avoided U.S. tariffs.
Alberta remains relatively insulated from the trade dispute because energy exports have so far avoided the brunt of U.S. tariffs.
Meanwhile, producers are capitalizing on higher crude prices by delaying maintenance and scheduled slowdowns.
Conventional natural resource production is now expected to grow 4.5 per cent, up from the 3.7 per cent forecast in Budget 2026.
For now, Alberta’s oil-fuelled fiscal turnaround has put the province back in the black — but Nixon isn’t betting the budget on crude staying there.