Lower-than-anticipated oil prices put Sask.'s budgeted revenues at risk

Shlok Talati · CBC News

· Posted: May 12, 2025 6:32 PM EDT | Last Updated: 8 minutes ago

Oil prices person been trending downward since the commencement of this year, from $80.04 US/ barrel successful January to arsenic debased arsenic $58.07 US/ tube past week. That puts millions of dollars of Saskatchewan lipid revenues in jeopardy.

Saskatchewan projected its lipid gross successful the province's March budget based connected an mean terms of $71 US a barrel. Since then, lipid prices person deed oregon surpassed that fig lone twice. 

Oil and earthy state gross were budgeted to marque up for 5.1 per cent of the full wealth coming successful for the province. The fund says each $1 quality from that $71 people costs the state $17.9 cardinal dollars successful lipid revenue.

As of Monday, this year's fiscal mean was $62.23 US per barrel. As per the budget, that's much than $156 cardinal little successful estimated gross coming into Saskatchewan. 

Keith Willoughby, dean of Edwards School of Business astatine the University of Saskatchewan, said these numbers could beryllium aboriginal informing signs for the province. 

"This is an $18-million [per dollar] headache for the authorities of Saskatchewan," helium said. "That's a sizeable interaction connected the provincial budgetary landscape."

It's lone been a small implicit a period since the fiscal twelvemonth began, and contiguous estimates could alteration if prices summation oregon alteration implicit the year. Willoughby said it's a small aboriginal to flip the fund retired completely, given that accrued summertime driving could perchance propulsion the prices of gasoline and lipid upwards.

"If we were to support a $71-a-barrel terms for oil, we'd person to person prices adjacent to $80-a-barrel for the adjacent respective months. So to maine it volition beryllium important to place what happens implicit the adjacent 1 to 2 months," Willoughby said. 

Joe Calnan, vice-president of vigor and Calgary operations astatine the Canadian Global Affairs Institute, said a weaker-than-expected request and a higher-than-expected accumulation is causing the prices to thrust down.

"I'm trying to support a grip connected the full thing, but, precise absorbing clip to beryllium watching the lipid market," Calnan said.

OPEC+, a radical of large oil-exporting nations, has loosened proviso constraints to bring much lipid onto the market. Calnan said that determination accelerated lipid supply, portion the commercialized quality betwixt US and China compounded the contented by lowering demand.

"We're seeing rather a spot much lipid coming connected to the marketplace acold sooner than anticipated, and this hasn't travel astatine the cleanable time, arsenic we are present seeing astir apt expectations of little demand," helium said.

The mean per-barrel terms for the past fiscal twelvemonth was $74.38 US. Willoughby said it would've been tricky for the state to person anticipated an close per-barrel terms successful tumultuous times wherever governments are near navigating tariffs, OPEC+ decisions and commercialized policies coming retired of the White House.

"It mightiness person been challenging for the authorities to anticipate, maybe, the interaction of the tariff turbulence and immoderate of the softening of request we're seeing. These situations are ever amended viewed successful hindsight."

Willoughby said it mightiness beryllium important for the authorities to nonstop retired connection to Saskatchewan residents astir revised estimates and however they'll interaction people.

The province's projected a razor-thin surplus of $12.1 million, but it didn't origin successful immoderate fallout from American oregon Chinese tariffs, including a 100 per cent tariff connected canola imports.

Saskatchewan's attack was a departure from budgets successful Alberta and B.C., which each featured dedicated contingency funds of $4 billion. Instead, the state banked connected a beardown fiscal outlook and "responsible" spending to upwind the impacts of tariffs.

Willoughby said the determination to not person a contingency could beryllium detrimental. 

"We went into the concern with nary backup goalie. There was nary information net, determination was nary constricted contingency plan. So it's benignant of, like, now our archetypal drawstring goalie got injured and truthful present we are dealing with immoderate of the repercussions."

Saskatchewan's Ministry of Finance, successful an emailed response, said the provincial fund lipid terms forecast is established utilizing "a multitude of adept backstage assemblage lipid terms forecasts astatine the clip the fund is finalized, typically astir mid-February."

"As we are conscionable implicit a period into the fiscal year, it is excessively aboriginal to cognize what the interaction of the alteration successful lipid prices is going to be. It is communal for the lipid terms to fluctuate up and down implicit the people of a year," the ministry said.