Oil Price Surge Brings Unexpected Windfall to Newfoundland and Labrador
Newfoundland and Labrador is experiencing an unexpected windfall of over $500 million due to the high price of oil, which has been driven up by conflict in the Middle East. The province's finance minister, Craig Pardy, says this influx of funds will help alleviate some of its $688-million deficit.
Oil production in N.L.'s offshore is up about 25% this year, with prices peaking at $138 US per barrel in April and now sitting around $100 US per barrel. The increase in oil royalties from the four producing oil fields is expected to reach $2 billion.
Pardy acknowledges that the windfall won't wipe out the deficit entirely but will make 'good inroads into eliminating or very close to eliminating' it. He also points out that the province has become less dependent on oil as a revenue stream, with 17% of its revenue coming from oil this year compared to 38% in 2008.
The unexpected money will be put towards affordability measures set to be introduced in the fall, which Pardy says are necessary due to the high cost of living. He also notes that the situation in the Middle East highlights how volatile the price of oil can be.