Crude oil prices trading above $62 US a barrel this week are another indication that the Alberta economy is in "full recovery," says Finance Minister Joe Ceci.
"It's a positive sign that goes along with the other economic metrics, like retail sales being up, manufacturing being up, and drilling being up," Ceci said during an interview with CBC News.
Though the budgeted price of oil was downgraded to $49 in the first-quarter fiscal update last September, Ceci said the recent climb puts Alberta's economy pretty much on course with 2017-18 budget expectations set last March.
"It kind of shows Albertans, and frankly everyone, that this recovery has got legs and it's there for the long haul," said Ceci.
The increase in the price of West Texas Intermediate crude is another sign of steady improvement in the Alberta economy, he said.
'This recovery has got legs and it's there for the long haul.'- Finance Minister Joe Ceci
The United Conservative Party, however, has a different view of Alberta's economic situation.
"The reality is that while oil sectors elsewhere have seen a recovery some time ago, Alberta's industry has been languishing because of this disastrous government's policies," said Annie Dormuth, spokesperson for the UCP, Alberta's Official Opposition.
The Alberta government predicted robust economic growth with the province's gross domestic product increasing by four per cent in the current fiscal year, but moderating to 2.5-per-cent GDP growth in the coming fiscal year.
Ceci said even with the slight increase in oil prices, the government intends to remain on the path of "fiscal restraint" to achieve a balanced budget in 2023.
'Belt-tightening' still to come
Premier Rachel Notley has previously signalled the government intends to pull back on spending in its spring budget by adopting what she called "compassionate belt tightening."
It's a departure from the path followed thus far by the Notley government.
The NDP unleashed billions of dollars in infrastructure spending during its first three budgets, intending to stimulate the struggling economy.
The spending pushed the deficit to record levels now forecast at $10.3 billion, a slight improvement over the $10.5 billion forecast in the first-quarter update last year.
"Balancing [the budget] in 2023 is contingent on us focusing on compassionate belt-tightening," Ceci said.
The drop in oil revenues, which the NDP inherited when it formed government in May 2015, sent Alberta's economy into a two-year recession from which it is just emerging.
Todd Hirsch, chief economist at ATB Financial, said recent oil prices are the highest in almost three years and roughly double the $28 a barrel seen in January 2016.
Hirsch said $50 WTI is generally considered the break-even point for industry.
Exceeding that price, said Hirsch, clears a "psychological mark" for businesses and consumers.
"I think it just helps bolster some optimism and confidence in Alberta's economy that in fact things are moving in the right direction," said Hirsch.
The recent price spike is linked to political upheaval in Iran, and pipeline outages in Africa and the Middle East, creating a bottleneck of supply reaching refineries, said Hirsch, who doesn't expect the price to continue to climb.
Hirsch predicted 2018 will be a "decent" year for economic growth in Alberta, with oil settling at around $55 a barrel.
Oil at $100 again?
Calgary energy analyst Tim Pickering said it's not out of the question for oil to climb to $100 over the next five years.
"That's definitely possible," said Pickering, president of Auspice Capital, who notes the demand for crude is not disappearing.
"The global demand for crude, especially in the developing world, is really quite insatiable at this time," said Pickering.
But he cautioned that low prices over the past couple of years have resulted in a lack of reinvestment.
That could put the future supply of crude "at risk," said Pickering, creating a higher demand for oil and higher prices.
Hirsch agreed that oil could hit $100 in future, but warned the price could also drop.
"There's an equally plausible scenario that oil could go back to $30," he said. "Anything could happen."