Say it slowly: Twenty. Eight. billion. Dollars.
It's a staggering sum of money, when you think about it.
If you could save $10,000 a day, each and every day, it would take you over 7,600 years to accumulate that amount of cash.
Thanks to oil and gas, the Alberta Government only needs one.
Provincial revenue from royalties (and other related fees) is expected to total $28.1 billion in the current fiscal year, ending March 31. Even accounting for inflation, that's by far the province's largest annual take from its abundant nonrenewable resources.
"It's really hard to overstate how big these numbers are," said Trevor Tombe, an economist at the University of Calgary.
It is also difficult to wrap your mind. Such large sums of money are beyond the everyday experience of most people, they can almost lose their meaning.
Albertans are used to booms and busts, so this may seem like just another roller coaster ride of resources. But even by those standards, this latest boom has been especially big and has come at breakneck speed.
With a new provincial budget due to be released on Tuesday, a key question will be: What to do with all this extra money?
To help understand how much money the province is now working with, and how quickly its fortunes have turned, here are five key things to understand about the current royalties journey.
1. It's the biggest rally in history
Two years ago, Alberta's finances looked very, very different.
When the government released its 2021-22 budget, it expected just $2.9 billion in revenue from nonrenewable resources for the fiscal year.
What actually happened shattered those expectations: The province raked in $16.2 billion in the ensuing 12 months.
"We've never seen that kind of massive swing before," Tombe said.
"The change in our budget balance, from a nice big deficitstill modest surplusto now a large surplus โ is the largest swing in provincial budget balances in Canadian history."
The upward trajectory continued into the 2022-23 fiscal year, which is now drawing to a close. Things are looking pretty good for 2023-24, too.
We'll get revised estimates when the new budget is released on Tuesday, but the way things are shaping up, the current fiscal year will dwarf all others when it comes to Alberta's oil and gas revenue.
Even taking inflation into account.
2. We are talking real dollars here
Some of you might be thinking: Of course these numbers are high; We are in a period of high inflation.
what about the real dollar values?
Well, those also break records.
Adjusted for inflation, Alberta's nonrenewable resource revenue has never been higher.
In terms of actual revenue, the current fiscal year stands out above all others, including 2005/06, the boom year in which the provincial government handed out "prosperity checks" (also known as "Ralph Bucks", so called by then Prime Minister Ralph Klein) to all Albertans.
The recent increase in royalties is due to the confluence of three main factors: high oil prices, record amounts of oil productionand the maturation of several large oil sands projects, which means they are required to pay a higher royalty rate.
Today's stream of cash is in stark contrast to the recent past.
3. The last recession
Think back, back to 2015.
Remember the infamous โlook in the mirrorโ comment?
The then Prime Minister Jim Prentice delivered the phrase in an offhand comment on the CBC radio call-in show alberta@noon. The topic was the dire financial situation facing the province at the time.
A global drop in oil prices was hitting the province hard. Budget deficits and a broader recession loomed.
Prentice tried to prepare Albertans for the difficult times ahead. He repeatedly warned that falling oil prices would open a "$7 billion hole" in the province's finances.
His answer was a budget packed with spending cuts and tax increasesfollowed by a general election.
Voters rejected Prentice's vision and handed him a stunning defeat, marking the end of a 43-year progressive Conservative dynasty and, ultimately, the end of the political partyitself.
Alberta had a new PND governmentwho now faced those same fiscal challenges.
For the next four years, oil prices remained low, as did government revenue.
The single tenure of the NDP government in power was marked by one of the lowest periods of non-renewable resource revenue in the province's history.
The UCP government elected in 2019 under Prime Minister Jason Kenney did not fare much better, at first. Oil prices stayed low, and then the COVID-19 pandemic hit the economy even harder.
Which makes the recent change all the more remarkable.
4. About $6,200 per person
If the province were to take the $28.1 billion it expects to collect this year in nonrenewable resource revenue and distribute it equally to all Albertans, that would work out to about $6,200 per person.
Tombe believes breaking down the numbers this way helps convey the true scale of Alberta's recent windfall, as it's hard to tell the difference between a million and a billion, let alone between 10 and 20 billion.
"They all sound equally great, and I think that makes it difficult for us to have a conversation about it," Tombe said.
"Dividing it by person, for a family of four, it equals $2,000 a month. That's a lot of money."
However, when viewed through this lens, Alberta has seen even bigger windfalls in the past.
While the province has never received more royalty money than it is currently receiving, the province has also never had as large a population as it does now.
In the late 1970s and early 1980s, in the midst of the Supply shock that triggered oil pricesthe province actually received more money from oil and gas, per capita, compared to today.
Those revenues were supercharged by a 1973 decision by then-Prime Minister Peter Lougheed to switch to a price-sensitive royalty system. (Before that, royalties were paid at a fixed rate.) By the late 1970s, oil and gas royalties made up the majority of Alberta government revenue.
5. It's not like the 1970s, but that boom still resonates
Although Alberta's coffers are flush with cash now, it still doesn't compare to where the province found itself nearly half a century ago.
In the late 1970s, oil and gas royalties accounted for between half and three-quarters of total government revenue, a staggering proportion by today's standards.
By this metric, things bottomed out in 2015/16, when non-renewable resources accounted for just 6.5 percent of total provincial government revenue.
Since then, they have shot up to nearly 37 percent.
But today's governments are still benefiting from that 1970s boom.
The Alberta Heritage Savings Trust Fund was established in 1976 and loaded with the excess cash from all those royalties.
Since then, the fund's investment earnings have been used to pay for capital projects and generate other provincial endowments. The fund has also transferred tens of billions of dollars to general revenue for the province.
"That's all thanks to savings that occurred half a century ago," Tombe said.
With the new boom that Alberta is now enjoying, Tombe believes it is time for a similar, forward-looking mindset.
"Thinking about how we can address our long-term challenges with these short-term windfalls is critical," he said.
We'll have a better idea of โโwhat the province has in mind for all that money when the 2023 Budget is released on Tuesday.
