High oil price means free money for Albertans

GIVEAWAY: The sky-high cost of oil has resulted in a huge budget surplus and the province's governor is eager to share some of the wealth with his citizens


Sat, Sep 24, 2005 - Page 6

Citizens of the western Canadian province of Alberta have a good reason to smile this northern winter.

The oil and gas-rich part of Canada, home to just under 3 million people, has decided that some of its bumper inflows of cash from the doubling of energy prices over the last year will be directly handed over to its lucky residents.

Each Albertan is to receive a so-called "prosperity bonus," a one-off payment of hundreds of Canadian dollars as the province's premier, Ralph Klein, struggles to find things to do with his growing budget surplus.

That should bring a warm glow to the inhabitants of the capital, Edmonton, where temperatures regularly fall to -50oC in the winter.

Alberta, which sits on some of the world's largest oil and gas reserves, is Canada's biggest oil producer by far, though neighboring British Columbia and Saskatchewan have also enjoyed windfalls from the rise in oil prices, which three weeks ago set an all-time high above US$70 a barrel.

Prices are expected to rise even higher if Hurricane Rita wreaks anything like the havoc Katrina did on the US Gulf coast.

Klein can look forward, it is estimated, to a budget surplus of C$8 billion (US$6.83 billion) this year, of which half would be due to the oil windfall.

The province is already debt-free and has the lowest taxes in the country, so Klein, a conservative, has decided that about a third of the unexpected extra cash will be mailed to grateful citizens early next year.

Local media have calculated that the cheque each person gets could be in the region of US$256-US$341, but Klein has suggested that the amounts could be "significantly larger." In fact, he said, the media estimates are not "even in the ball park."

You might think Canadians would be cock-a-hoop about the handout and, indeed, Klein says people have been calling him asking "where's my cheque?"

But maybe it's the long, dark nights of winter that make some Albertans grumpy. Some have complained that with unemployment at zero and retail spending also high, the last thing the government should be doing is giving people more money for flat-screen televisions and SUVs.

Business leaders have urged that the money be spent on corporate tax cuts while some economists say all, rather than some, of it should be spent on infrastructure such as roads and schools, which suffered big spending cuts in the 1990s as the Edmonton government moved to pay off its budget deficit.