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Tuesday, Apr 20th, 2021

Finance Minister Concerned About “Perfect Storm” as Oil Prices Plummet

The following text was excerpted from the media outlet cited on March 9, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.

From VOCM News

The province’s Finance Minister says he is very concerned about what the plunging price of oil will do to the bottom line of the budget.

With ongoing concerns over coronavirus—and now a dispute involving Saudia Arabia, Russia, and OPEC—Brent is trading below $35 per barrel.

Speaking on the VOCM Morning Show, Tom Osborne said it’s a victim of the global economic crisis.

“Last year we had a shutdown in oil production here in the province. This year we had another shutdown in oil production.” Now with the concerns over coronavirus, Osborne calls the impact a “perfect storm.”

In Budget 2019, the province estimated that Brent Crude would have to trade at an average of $63 a barrel all year in order to meet budgeted projections.

While they have a contingency fund, Osborne says it is nowhere near enough to cover the impact. He estimates that every lost dollar in crude prices represents about $20-million of lost revenue to the province.

Osborne said, “This is obviously going to require additional borrowing, which is unfortunate, and it’s going to impact the deficit.”

Osborne indicates he will meet today with opposition leaders to discuss the impact this will have on the budget. They will also be reaching out to the eleven forecasters that provide government with crude price projections.