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Tumbling price of oil prompts Newfoundland and Labrador to curb spending

Tumbling price of oil prompts Newfoundland and Labrador to curb spending

ST. JOHN'S, N.L. - Newfoundland and Labrador Premier Kathy Dunderdale is reining in travel and other discretionary spending as her government faces a growing deficit.

Dunderdale says cabinet ministers have been asked to review departmental travel and other budgets in a bid to save tens of millions of dollars.

At issue is price of Brent crude oil which at around US$103 per barrel is far lower than the US$124 per barrel on which the provincial budget relies.

The province made its budget based on independent oil price forecasts.

But Dunderdale says the fossil fuel market is volatile and that her province is facing a deficit hundreds of millions of dollars higher than forecast.

Newfoundland and Labrador relies on offshore oil for about one-third of its revenues.

The provincial government estimates that every $1 drop in the price of oil takes about $20 million out of its coffers.

News from © The Canadian Press, 2012
The Canadian Press

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