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Should Alberta’s oil dependent government start hedging to protect its revenue?

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An alliance of employer organizations is asking for a meeting with Alberta Premier Rachel Notley to discuss what it calls the ‘dire economic situation’ in the province

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With its budget deficit swelling and oil boom-and-bust cycles expected to accelerate, given the growing experience of other oil-dependent jurisdictions like Mexico, it’s an idea that should at least be given due consideration. Saskatchewan and Newfoundland and Labrador, both reliant on oil revenue, should also take note.

It’s certainly a less intrusive way to manage oil shocks than forced economic diversification, going into debt or raising taxes – the levers being used today by Rachel Notley’s NDP government to survive the downturn.

Tim Pickering, president and CIO of Auspice Capital Advisors Ltd., a commodities and alternative investment trading firm based in Calgary, said such a program would make Alberta’s revenue more stable and more predictable.