Non-renewable resource revenue in Saskatchewan is expected to grow by $1.6 billion to $2.9 billion in 2022-23 due largely to higher forecast prices for potash and oil.
Saskatchewan Finance Minister Donna Harpauer said, however, that her revenue forecast is based on “cautious oil price projections.”
“It’s too soon to tell if oil prices will remain high for an extended period and what impact that could have on revenues,” she said, referencing “volatile world events.”
“We will continue to monitor the impact on both revenues and affordability and respond as required.”
Oil revenue is projected at US$75.75 per barrel, with oil and natural gas contributing $867.5 million to the province’s coffers.
Harpauer said every one-dollar change in the price of a barrel changes the budget by $14 million.
“We use industry to give us their projections on what they think it would be, on average, through the entire year,” she said.
“But there is some expectation that it is going to be higher than it was last year, and we have build that into the forecast.
Given the sharp increase in commodity values in recent weeks, the provincial government’s price projections are “pretty modest,” according to Jason Childs, associate professor of economics at the University of Regina.
- Canadian man dies during Texas Ironman event. His widow wants answers as to why
- On the ‘frontline’: Toronto-area residents hiring security firms to fight auto theft
- Honda’s $15B Ontario EV plant marks ‘historic day,’ Trudeau says
- Canadians more likely to eat food past best-before date. What are the risks?
“Those estimates probably would have been put in well before the major movements in oil prices and so that leaves some room for good economic news in terms of extra natural resource revenues,” Childs said.
Childs said he doesn’t expect prices to drop below estimates laid out by the government Wednesday.
“We haven’t seen major movements on the spending side of the budget this year,” Childs said.
Potash is forecast at US$407 a tonne — an increase of 216 per cent. Total potash revenue is forecast at $1.5 billion.
On Tuesday, Saskatchewan announced a record year in 2021 for the potash industry.
Production was 14.2 million tonnes, with sales valued at $7.6 billion.
Nutrien announced on March 17 that it is increasing production by nearly one million tonnes to approximately 15 million tonnes in 2022.
The Saskatoon-based company said the increase in production capability is due in part to the uncertainty of potash supply from eastern Europe due to Russia’s invasion of Ukraine.
Saskatchewan’s Ministry of Energy and Resources said it continues to focus on increasing oil production to 600,00 barrels a day and for annual potash sales to hit $9 billion by 2030 as part of the province’s growth plan.
The province is also aiming for annual uranium sales of $2 billion, capturing 10 per cent of the global helium market and doubling the size of the forestry sector.
“With demand increasing and supply being reduced due to global unrest, this should be a strong year for Saskatchewan’s resource sector and the jobs it creates,” said Bronwyn Eyre, minister of energy and resources.
“Saskatchewan will continue to be a stable, reliable source of sustainable oil, potash, uranium, forestry products and many other natural resources that the world needs.”
Harpauer cautioned that there are risks associated with her forecasts.
She said a downturn in commodity prices, particularly oil and potash, could limit growth potential over the medium term.
The current geopolitical tension between Russia and Ukraine could also impact global supply chains and worsen current bottlenecks, Harpauer added.
Comments