Finance Minister Joe Oliver is acknowledging the dramatic drop in oil prices will take a further bite out of government revenues, making Ottawa's previously declared surplus less certain.

The government already shaved billions off of its revenue forecasts when it released a fiscal update on Nov. 12, when the price of North American crude was around $81 (U.S.). That price closed Monday below $56.

As the price of oil continued to slip after his fiscal update, Mr. Oliver initially maintained that these adjustments were conservative enough to capture lower prices without affecting Ottawa's bottom line. But he said Monday the further drop will have an impact.

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"We're not about to come out with a number at this point. However, we're confident we will achieve a budgetary balance next year," he said Monday, before a meeting of provincial and territorial finance ministers in Ottawa.

The government is forecasting a surplus of only $1.6-billion, which would be at risk of slipping into deficit territory should oil prices stay low. Ottawa has set aside $3-billion for unforeseen events, and several economists said Monday that should be enough to maintain a small surplus.

A report to be released Tuesday by CIBC World Markets projects Ottawa will lose $2.5-billion in revenue if the oil price levels out around $70 next year. Provinces would be hit harder, suffering a combined loss of $5-billion to $8-billion under that scenario. Alberta could face a $7-billion hit on its own.

Bank of Montreal chief economist Doug Porter said fluctuating oil prices amount to a "huge wild card" for finance ministers that will make it very difficult to produce economic forecasts.

"It looks like [Ottawa] might still be able to claw out a surplus if absolutely everything went right from here, but we know better than to expect everything to go right. So I think very much they're at risk of remaining in deficit in the next fiscal year based on today's oil prices," he said.

Craig Alexander, the chief economist of TD Economics, estimates the drop will eat up about two-thirds of the $3-billion set aside for contingencies. "That's the whole reason why we have a contingency reserve. The contingency reserve is there in case the economy doesn't play out the way you anticipate," he said.

Finance Canada relies on an average forecast from 15 private-sector economists to underpin its own forecasts in the budget and fall update. Mr. Oliver noted that process will occur again before the government writes the 2015 federal budget.

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At a meeting in Washington, North America's three federal energy ministers conceded Monday much more needs to be done if their bold vision of an integrated continental energy market is to become a reality. Greg Rickford, Canada's Minister of Natural Resources, called the meeting a crucial start, and said the three came up with a "to-do list as opposed to a wish list."

Mr. Rickford said short-term price volatility should not drive policy. "Our best decisions and therefore the policy of our government are typically made with a view to long-term – 20-to-40-year market expectations. We are equally interested in the cost averaged out over those times," he said.

Several provincial finance ministers said after the meeting with Mr. Oliver that they used the opportunity to press him on making additional spending commitments on infrastructure, which they argued would be a good way to give the economy a boost. They also argued that large infrastructure projects can be more affordable in the current low-interest rate environment.

Mr. Oliver appeared to be open but non-committal to more infrastructure spending, several ministers said. Ontario Finance Minister Charles Sousa said Mr. Oliver gave the impression that he wanted to have a better idea of where the economy is heading before making any new pledge on infrastructure.

Ontario and Ottawa have been at odds lately over a wide range of issues, including federal transfers. Mr. Oliver announced Monday that transfers to Ontario would rise by $1.25-billion next year, a bigger increase than any other province is getting, a move welcomed by Mr. Sousa.

Mr. Oliver said the transfer totals show Ottawa is being fair to Ontario.

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With a report from Paul Koring in Washington