Oil prices dropping despite surge in Alberta oil production to start 2025

Oil prices continue to tumble, with the price of West Texas Intermediate sitting around $58 USD a barrel on Wednesday, and that is putting a strain on Alberta.

Alberta’s economy is grappling with the implications of declining oil prices, as West Texas Intermediate (WTI) crude trades below the $60 USD per barrel mark, around $58 USD on Wednesday.

The downturn is showing challenges for a provincial budget based on an average WTI price of $68 USD per barrel.

“We will adjust it,” said Finance Minister Nate Horner.

“It’ll be interesting to see the economic data, too, from the first.”

Horner admits he is checking the price of oil daily.

“If it stays at that level, you’d have to consider all of the other things,” he said.

Horner says the uncertainty surrounding tariffs is nearly as impactful as the tariffs themselves, which are 10 per cent on oil and gas exports from Canada to the U.S.

“We’ve definitely seen a chill in investment while we are seeking clarity,” said Horner.

“I know there’s geopolitical games afoot around supply. I think OPEC and others, they want to conserve their market share. And they know that oil at this level won’t attract any drilling investment in the United States.”

Each dollar decrease in oil prices translates to a major economic impact for Alberta.

Richard Masson, an executive fellow at the University of Calgary School of Public Policy, says Alberta could stand to lose billions.

“My guess is over $5 billion hit to the deficit if we stayed at $58 for the balance of this fiscal year,” said Masson.

“Tariff impacts from the U.S. and the likelihood that that’s going to result in slower economic growth globally, possibly a recession, so that tends to mean lower oil demand.”

Now, Albertans are seeing relief at the pumps, as prices drop there, too.

In Calgary, prices on Wednesday were around 109.9 or 110.9 per litre.

Although a positive on the wallets of many, Calgarians like Kathy Smith say it’s part of living in Alberta.

“We’re not getting off oil and gas. People are still buying cars that need oil and gas,” she said.

“How do you stabilize that market? I’ve been here for most of my adult life and boom, bust, boom, bust. And you roll through it.”

Smith adds that the industry has been a benefit to her family.

“Do I want our gas and oil to sell at top, top price? Of course I do. And do I want it to be a pipeline across the country? Yeah, I do. I feel very strongly about all that,” she said.

“The oil and gas industry has supported my family and is continuing to support my children and that’s why I want it to do well.”

Last week, ATB reported that oil production is up to start 2025.

4.19 million barrels per day in March is what Alberta averaged in oil production, up from the 4.04 million in 2024.