Wednesday, September 26, 2012

It would appear Alberta has a gambling addiction

Faced with deficit, Alberta Premier banks on rebounding oil prices 

What gets a gambler hooked? Is it a constant wave of losses? or that one big win? Most addicted to gambling will probably tell you that it's the one big win which makes you believe another big win is around the corner. People then chase this big win until they are bankrupt.

Revenue at this point will never be rebounding, and Alberta is going to chase the big win they seek all the way down the drain.
Speaking Wednesday at a conference of the province’s municipal politicians – whose cities and towns rely on the province for hundreds of millions in infrastructure transfers – Alison Redford said the growing deficit wouldn’t mean major changes to the current budget, suggesting the government is banking instead on trimming spending through “in-year savings” and waiting for a revenue rebound.
Whenever you see "waiting" as a financial strategy, look out. This is a government who has run out of ideas (if they had any in the first place).

Seemingly the Alberta government still believes the dollar value is what provides their profit, and not the speed of which oil prices increase. I'm really not exactly sure what is so hard for a government so invested in energy to understand about energy returned on energy invested, but alas this concept seems to escape them.

Unfortunately (while we are waiting), food costs and a number of inputs we all require for daily life continue to relatively increase in price and so are the costs of production. The Alberta government better get it's act together soon and realize that the amount of infrastructure required to support an industry which at oil prices relatively higher than at any time in Alberta's profitable history, still can't turn a profit for the government is unaffordable. We don't even have a twinned highway yet!

Some might say, well the government spends too much. Yes, it does, but what I think isn't understood is that this spending is necessary and as is insufficient to run the required infrastructure.

Morgan Stanley: Global Growth Has Collapsed

So what are we waiting for? Where's Plan B? We're running out of time here Albertans to put a hedge in place in case revenue's don't rebound.  This should be your primary concern, not some stupid arena that we won't be able to afford at all soon anyway.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.


  1. Yes I like the beginning of the article :) Big Win makes You feel that the next big win is waiting next on the corner... FALSE! Read this gambling problem article Casino article gambling and open your eyes on the topic of gambling! Back to the article, I would spend more on oil then spending at any casino. Oil prices up, then we going to be more healthy, less cars on the roads ;)

  2. Hi Mat,

    You may have missed the point I'm making here that a sustained high oil price isn't going to be happening anymore and Alberta's spending no matter what oil price is will always be less than what's required.

    The gambling aspect refers to the fact Alberta is basing economic planning and decisions on expected (hoped for) market moves.

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