2009 at the height of the global crisis
The plunge in oil prices that is depressing activity in oil fields throughout Western Canada is also squeezing the budget of Newfoundland and Labrador, where a third of provincial revenue comes from the offshore oil industry.
Bank of CanadaThis severe a reaction to the plunge in prices has not been seen since 2009 at the height of the global crisis, and 1999 when oil prices fell below $10 per barrel. Read on
But response to lower oil prices by companies active in Newfoundland’s offshore — where production comes from the long-established Hibernia, Terra Nova and White Rose fields in the Jeanne d’Arc Basin — has been muted so far, in contrast to the rapid investment pullback in the busy Western Canadian Sedimentary Basin.
The province, which had budgeted oil prices of US$105 per barrel on average for the 2014/2015 fiscal year, is facing a much larger than expected budget deficit of $916 million after reducing its oil price expectations to US$63 per barrel for the four months ending in March, 2015.
“We clearly need to map out a path so that our expenditure growth is contained, the current expenditure level is reduced and we position ourselves on a path for a return to a surplus budget,” Finance Minister Ross Wiseman said in providing a fiscal update Dec. 16. The province announced a hiring freeze and cuts to discretionary spending in late November.