Hedging Alberta Government's Oil and Gas Revenue: Is Acting Like a Farmer a Viable Strategy?

The provincial government of Alberta in Canada experiences significant annual revenue variability arising from changes in crude oil and natural gas prices. This research evaluated whether Alberta’s non-renewable revenue risk could be managed using a derivatives hedging program. Results from a historical hedging simulation approach suggested that such a program would not have been the most effective method of managing revenue risk over the period of 1995-96 to 2003-04. Total impacts of hedging would have varied from Can-$8 Billion to Can $6 Billion over this time period. These results suggest the Alberta government explore alternative methods to manage non-renewable resource revenue risk.


Issue Date:
2009
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/91401
Total Pages:
24 p.
JEL Codes:
Q480; G11
Series Statement:
Staff Paper
09-01




 Record created 2017-04-01, last modified 2017-08-25

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