Alberta, Canada’s oil and gas powerhouse, has delivered a stunning fiscal surprise, posting an $8.3 billion (CAD) budget surplus for the 2024-25 fiscal year, far exceeding the modest $355 million projection in its February budget. This windfall, driven by soaring resource royalties, robust oil prices, and record production, underscores Alberta’s pivotal role in Canada’s energy sector and economy. As the province looks to expand its export capacity with new pipeline proposals, the implications for Canada’s energy future and federal finances are profound.
Canada could be energy-independent if the Green Energy policies of Trudeau and Carney had not been followed. The fact that the pipelines from Alberta heading east have been banned places more dependence on the United States. Canada would be in a very different negotiation with the United States on tariffs. In the article “All trade with Canada on notice for tariffs. What does this mean for oil, electricity and agriculture?”
I posted yesterday that we are seeing a trade war start, and that trade war appears to be along the lines of new trading bloc alliances forming around the world. Canada, the UK, and the EU face economic failure going down together.
Let’s dive into Alberta’s surplus, Canada’s energy mix, the potential benefits of new pipelines, and Alberta’s hefty contributions to the Canadian federal government.
Alberta’s Surprise Surplus: A Boon from Oil and Gas
Alberta’s fiscal year 2024-25, which ended in March 2025, saw total revenues hit $82.5 billion, $8.9 billion more than budgeted, largely due to non-renewable resource revenues that soared $4.7 billion above forecasts. Strong global crude prices, averaging $74.34 per barrel for West Texas Intermediate (WTI) against a budgeted $74, coupled with record oil sands production, fueled this windfall. The expanded Trans Mountain pipeline, operational since May 2024, played a key role by boosting the price of Alberta’s heavy crude, narrowing the differential with lighter blends and increasing royalty revenues. Corporate and personal income taxes also exceeded expectations, adding $1.1 billion and $500 million, respectively, while federal transfers, including $300 million more from the Canada Health Transfer, further padded the surplus.
Finance Minister Nate Horner attributed the success to conservative oil price forecasting and a growing population driving tax revenue. However, he cautioned that a projected $3.8 billion deficit looms for 2025-26 due to weaker oil revenues and U.S. trade risks, including potential tariffs under President Donald Trump. Despite this, Alberta’s surplus will bolster debt repayment, the Alberta Heritage Savings Trust Fund, and wildfire recovery efforts, showcasing the province’s fiscal resilience.
Canada’s Energy Mix: Oil and Gas Dominate
Canada’s energy mix is heavily weighted toward fossil fuels, with oil and gas accounting for a significant share of both domestic consumption and exports. According to the Canada Energy Regulator, in 2023, Canada’s primary energy production was approximately:
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Crude Oil: 31% of total energy production, with Alberta’s oil sands contributing over 60% of Canada’s 4.9 million barrels per day (bpd) output.
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Natural Gas: 34%, primarily from Alberta and British Columbia, with production around 17 billion cubic feet per day.
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Hydroelectricity: 24%, concentrated in Quebec, British Columbia, and Ontario.
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Coal: 5%, declining due to phase-out policies.
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Renewables (wind, solar, biomass): 4%, growing but still a small share.
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Nuclear: 2%, mainly from Ontario’s reactors.
Alberta’s oil sands, producing 3.5 million bpd in 2025 and projected to hit 4.7 million bpd by 2034, are the backbone of Canada’s energy exports, which account for about 8% of GDP. While Canada pushes for net-zero emissions by 2050, oil and gas remain critical, with 96% of crude oil production exported, mostly to the United States. This reliance on fossil fuels, particularly from Alberta, underscores the need for expanded export infrastructure to diversify markets and maximize economic returns.
New Pipelines: Unlocking Export Potential
Alberta’s landlocked crude has long faced export bottlenecks, with the U.S. absorbing nearly all of Canada’s oil exports. The Trans Mountain expansion, adding 590,000 bpd of capacity, has been a game-changer, enabling tanker exports from British Columbia’s West Coast to markets in Asia and beyond. However, Alberta is not stopping there. Premier Danielle Smith announced that a private company is expected to propose a new 1 million bpd pipeline from Alberta’s oil sands to British Columbia’s northwest coast, potentially to the Port of Prince Rupert, within weeks. This project, supported by Alberta’s commitment to supply royalty barrels, aligns with Prime Minister Mark Carney’s pledge to fast-track major infrastructure to position Canada as an “energy superpower.”
The economic benefits of new pipelines are substantial. Canada’s oil exports were valued at $123 billion in 2023, with Alberta contributing the lion’s share. A new 1 million bpd pipeline could add $20-30 billion annually to export revenues, assuming WTI prices of $60-80 per barrel, by accessing higher-paying international markets and reducing reliance on discounted U.S. sales. The Alberta Energy Regulator projects oil production growth to 4.7 million bpd by 2034, necessitating additional takeaway capacity to avoid price discounts due to oversupply. Moreover, pipelines like the proposed one could support emerging resources like hydrogen, enhancing Canada’s energy diversification.
However, challenges remain. Pipeline company Enbridge has called for legislative changes, such as Bill C-5, to streamline approvals, citing lengthy regulatory processes. Environmental opposition and Indigenous consultations could also delay projects, while U.S. tariffs pose a risk to export margins. Despite these hurdles, the economic upside of new pipelines—higher royalties, taxes, and job creation—makes them a priority for Alberta and Canada.
Alberta’s Contribution to Federal Coffers
Alberta’s oil wealth doesn’t just benefit the province; it’s a major driver of federal revenues, funding programs across Canada. Through taxes, royalties, and economic activity, Alberta contributes significantly to Ottawa’s budget, though exact figures vary by year. In 2024-25, Alberta’s corporate and personal income taxes, boosted by the oil and gas sector, likely sent over $20 billion to the federal government, based on historical trends where Alberta accounts for 15-20% of Canada’s federal tax revenue despite having 11% of the population.
The federal government also collects GST, carbon taxes, and excise duties from Alberta’s energy sector, adding billions more. For example, the federal carbon tax on fuels generated $8 billion nationally in 2023, with Alberta’s high energy consumption contributing a disproportionate share. Additionally, equalization payments, funded by federal revenues, indirectly rely on Alberta’s economic output, though Alberta itself receives no equalization due to its high per-capita GDP.
Alberta’s leaders, including Premier Smith, have long argued that the province’s contributions are underappreciated, fueling tensions with Ottawa, particularly over policies like the proposed oil and gas emissions cap. The $8.3 billion surplus strengthens Alberta’s case for federal support on pipelines and regulatory reforms, as its economic health directly bolsters national finances.
Looking Ahead: Alberta’s Energy Future
Alberta’s unexpected surplus is a testament to the enduring strength of its oil and gas sector, but it also highlights the need for strategic investments to sustain growth. New pipelines could unlock billions in export revenues, diversify markets, and reduce vulnerability to U.S. trade policies. Canada’s energy mix, while slowly shifting toward renewables, will rely on Alberta’s fossil fuels for decades, making infrastructure critical to economic stability.
As they seek investors for new pipelines, there will be lots of skeptics. Just look at the billions lost on the Keystone Pipeline by President Joe Biden. There is a global migration of investment away from countries with green energy policies, as the world has gone bankrupt printing money for the Energy Transition that was never a genuine transition. It was just the addition of energy sources. Despite the trillions spent on wind, solar, and hydrogen, there has been an increase in fossil fuel use. Turley’s Law is still in play. Turley’s Law refers to the fact that the more money spent on wind, solar, and hydrogen, the more fossil fuels will be used, and we do not see an end to this formula.
As Prime Minister Carney navigates tensions with Alberta, including secessionist sentiments, his commitment to infrastructure projects signals a pragmatic approach to leveraging the province’s resources. For Canada to capitalize on its energy potential, federal-provincial collaboration on pipelines, regulatory reform, and market access will be essential. Alberta’s $8.3 billion surplus is not just a provincial win—it’s a national opportunity to strengthen Canada’s position in the global energy market.
Sources:
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OilPrice.com, “Oil-Rich Alberta Forecasts Unexpected Budget Surplus”
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The Globe and Mail, “Alberta records unexpected $8.3-billion surplus off higher resource royalties”
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Edmonton Journal, “Alberta ends 2024-25 fiscal year with $8.3 billion surplus”
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CBC News, “Alberta posts surplus of $8.3B in 2024-25 fiscal year”
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Wealth Professional, “Alberta boosts drilling and investment as oil output reaches new record”
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Canada Energy Regulator, 2023 Energy Production Data
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@OilandEnergyon X
Note: All monetary figures are in Canadian dollars unless otherwise stated. Export revenue estimates are based on conservative oil price assumptions and may vary with market conditions.
