EDMONTON - Alberta Premier Alison Redford is dropping more hints about a tough budget, but no hard facts on where the axe might fall.
"We know, as Albertans, that we go through volatile times, and this is certainly one of them," she said Monday.
Redford says the recent drop in oil prices is costing her government millions in expected revenue each day.
"We're losing about $75 million a day to the economy," said Finance Minister Doug Horner.
"As we look at North America as an entire economy with respect to energy, the more product that we see on the market, the more difficult it is for us to get the world price that we need for our oil," added Redford.
"It's fundamental for us to be able to get our product to tide water, to open up international markets, and to make sure that we're getting a much fairer price for our resource," she said.
She added the current situation emphasizes the need to diversify the Alberta economy, which is something her caucus has been focusing on.
Experts say the market is even more challenging for Alberta because oil production in the United States is up.
"US oil production, for the first time in their history since 1859, has now increased the largest amount, year over year, that they ever have," says University of Alberta Energy Economist Richard Dixon.
"In other words, the golden age of oil was not back in the forties, wasn't back in the 1800s; the golden age of oil production for the United
States is today."
"For the United States, it primarily means they're moving to energy security," he explains.
"For us - they're going to need our oil even less... We're going to compete - not only in the fact that they have more oil - it's better oil than we have," adds Dixon.
"It's going to get harder and harder to sell to the Americans. We need to look at other world outlets. We have to get very serious about that," he says.
Despite the economic challenge, Redford says Albertans want the government to live within its means while maintaining communities, health, education and infrastructure.
"We're committed to supporting families and communities, to ensuring that education and health care are priorities, putting in place the fiscal framework that allows us to continue to invest long-term in infrastructure and capital spending, so that we can continue to build on the opportunities that we've had in the past."
With those areas making up the lion's share of government spending, Redford isn't saying where the cost savings might come from.
When asked about reports provincial departments have been asked to trim their budgets by between 5 and 10 per cent, Horner said no.
"What we're trying to do is be very responsible about how we look at the decisions we have to make today... that is what caucus talked about."
The widening differential in oil price has been singled out by the province as the main cause of Alberta's declining revenue and subsequent budget challenges.
Dixon says the differential is caused by a number of factors.
"We have to get the oil to the marketplace, and that costs money, so we take a discount for that. The oil is priced in five major places in the world. Most of the world prices on sea ports, and so that's the world premium price," he explains.
"If you're in a landlocked situation like we are, you're going to receive less money because there's more oil and less places for it to go.... we're a long way from the major markets, so we have to take another discount. Now we also take another discount because we're not the same quality, and our quality of our oil is far less, so it has to be upgraded and worked on. By the time you add up all those discounts, you're looking at like, $50 a barrel from what you're seeing on TV."
While the growing differential in oil price isn't a surprise to Horner, the pace of its growth has.
"This is not something that was totally unexpected. We saw it on the horizon, what's happening," he explained, "is how fast it's coming."
Redford clarified the province is not looking at across the board cuts.
"It's not changing the plan we have in place," added Redford, "but it's certainly changing the pace."
"There's certainly some challenges that we face, but I think we'll get through them just fine," said Redford.
With files from Vassy Kapelos, and the Canadian Press
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