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Darren Makowichuk/PostmediaCall it two budget surpluses for the price of one — with a side order of improving economic growth ahead.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorPowered by soaring oil prices sparked by the U.S. war with Iran, the Alberta government is now forecasting a $2-billion surplus for the fiscal year that ends next spring and stronger economic performance.It marks a sharp reversal from February’s gloomy budget projection of a sizable $9.4-billion deficit.However, here’s the twist.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againFinance Minister Jason Nixon is also predicting that once the books for the previous financial year ending last March are released — they were delayed in June until the fall due to complications surrounding reporting on the province’s restructured health-care organizations — it will also show a surplus for 2025-26.An exact figure has not yet been released, although last year’s books benefited from higher oil prices in the spring and several other factors, said Nixon.It’s quite an improvement from the previous $4.1-billion of red ink expected for last year.“Based on what we have seen so far, with strong energy prices in March and strong investment returns throughout the year, we are also expecting to land in a surplus position for the ‘25-26 fiscal year,” Nixon told reporters Thursday.“It means we’re on the path to the province’s sixth consecutive surplus year.”Thursday’s first-quarter fiscal update shows, yet again, the whipsaw effect from global oil prices on the province’s books and the economy, in the face of ongoing geopolitical turbulence and the U.S.-Canada trade war.“We are price-takers, and this is one more illustration of that,” said Calgary Chamber of Commerce CEO Deborah Yedlin.“We don’t have any control if it goes either way.”When the province first released its 2026 budget six months ago, the government expected benchmark oil prices would average just US$60.50 a barrel. The U.S. war in Iran caused energy markets to suddenly spike as supplies in the Strait of Hormuz were disrupted, pushing West Texas Intermediate (WTI) crude over $100 a barrel for the first time since 2022.On Thursday, the WTI price rose more than a dollar to close at $83.53 a barrel.The province now expects overall resource revenues in the current year, led by bitumen royalties, to jump by nearly $10 billion above the budget forecast to a whopping $23 billion.“What we know, especially for this year, is that oil prices make or break Alberta’s fiscal situation,” said Charles St-Arnaud, chief economist with Servus Credit Union.“If oil prices start to decline, we’re really in trouble, and quickly.”Corporate and personal income taxes are also up, with stronger corporate profits stemming from rising commodity prices.Income flowing from government enterprises also increased by more than $500 million above budget projections, led by the Sturgeon Refinery expected to make a profit as energy prices rose.“I was somewhat surprised to see only a $2-billion surplus. The way markets are right now, looking ahead, I was anticipating something closer to six,” said University of Calgary economist Trevor Tombe. Trevor Tombe, economics professor at the University of Calgary. Dean Pilling/Postmedia“There is a lot of uncertainty.”The province has adjusted its oil price forecast for the current budget year up to $73.50 a barrel.However, benchmark U.S. oil prices have averaged about $88 a barrel through the first six months of the budget year, and only need to hover around $65 a barrel until next April to reach that threshold, which appears to be a conservative estimate.“I think it’s too low,” said Al Salazar, head of macro oil and gas research at energy analytics firm Enverus.“We’re destined for higher for longer and, unfortunately, the only thing that seems to be a downward risk (to oil price) is significant demand destruction . . . so far, we’ve seen no evidence of that.”Enverus expects WTI oil prices will average $95 a barrel for the rest of this year and through 2027. The U.S. Energy Information Administration recently projected West Texas Intermediate crude to average almost $81 this year, before dipping to $65 in ’27.The financial update also projects the province economy will grow by 2.5 per cent this year, up slightly from the budget. Other key measures have also been revised higher, including population growth, employment, business investment — and inflation.“This government can brag about a surplus all they want, but these numbers don’t mean anything if Albertans are being left behind,” NDP MLA Court Ellingson said in a statement.On the economic outlook, the report noted there has been an increase in agriculture and manufacturing exports, and pointed to ongoing investment and strong consumer spending.Capital spending in the oil and gas sector is anticipated to climb by $1.4 billion, or 4.4 per cent, this year, as oil drilling jumped in the second quarter in the wake of strong prices.Non-residential spending is forecast to increase nearly eight per cent this year, including the effect of the massive $13-billion data centre campus being built in Sturgeon County by tech giant Meta, and the associated gas-fired power generating facility. Artist rendering of the new data centre planned in Sturgeon County, about 30 to 35 km north of Edmonton. Photo suppliedThe number of people working this year has jumped by more than 39,000 through July. Total employment in Alberta is forecast to rise by three per cent this year, according to the update.While Alberta has faced a substantially lower hit from U.S. tariffs than most other provinces — energy exports are exempt under CUSMA — the trade war and this week’s Canadian counter-tariffs could hit businesses and consumers in the coming months, leading to greater economic uncertainty.“Alberta is in a stronger position than anticipated, but there’s still a lot beyond our control. Energy prices can change quickly. Trade uncertainty is real,” Nixon said.“We’re trying to create a situation with this budget that we create space to be able to deal with whatever may come, because we don’t know what’s going to come.”Chris Varcoe is a Calgary Herald columnist. 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