Needless to say when I listened to the Premier of Alberta give her televised commercial trying to defend a Government budget based on winning an election, I was far from amused.
Since the release of the budget I certainly have not for a moment believed in the projected revenue numbers used to "balance" it. For a Government that relies so heavily on it's oil and gas revenues to use such rosy numbers, and account for spending 100% in their budget is ludicrous and irresponsible.
If we go back to the prices of our natural resources in the month (March 09,2012) of the budget natural gas was trading at $1.64 CAD/GJ yet the AB govt budget called for $3.00. According to their website " Every 10-cent drop in the price of natural gas over 12 months = $28 million less revenue." To meet those budget numbers gas would have had to increase 45%.
In Alberta we have different types of crude oil. We have Edmonton Light (conventional) and Western Canadian Select (Bitumen & Synthetic) which we get paid at a different price than the West Texas Intermediate we use in our budget. The forecast used was $99.25/bbl, again from the Govt. website "Every $1 drop in the price of oil over 12 months = $223 million less revenue."
Edmonton Par on 09-Mar-12 was trading at $85.45 CAD/bbl far from the $99.25 hoped for. In fact 14% less, talk about budgeting on hope.
The Western Canadian Select was trading at $75.10 again very far from the hopes of $99.25 in fact a differential of 29.4% not the bitumen bubble the government would like you to think exploded.
So lets think about this for a minute, did the government not know about this? Well their own website explains the dynamics fairly well with pictures so even I could understand it. Albeit they only give you a one year history to show the decline, here is a chart that shows that a wide spread in differential is nothing new.
So after my long rant on boring numbers I will leave you to decide, was the Government misleading on their campaign of promises, incompetent on budgeting, or just did not understand what differential was when they completed their budget? I don't have that answer, but none of the above are acceptable for Alberta.