She said the bubble — the difference between the benchmark price for oil in North America versus Alberta's oilsands bitumen — has grown so wide it will take a $1-billion bite out of this year's budget and $6 billion the next.
"As we prepare this year's budget, it means we have to make some very difficult choices," Redford said in the eight-minute TV spot aired around the province.
"In this year's budget we'll hold the line on spending and we'll live within our means."
The budget is to be delivered March 7.
Redford said there will be changes to programs and services, but wasn't more specific.
"Some programs and services will change — especially those that are not sustainable over the long term," she said.
Redford has said in the past she won't balance the budget by sacrificing core service delivery in health and education or by shortchanging municipalities.
In the speech, Redford reiterated her pledge not to hike taxes or introduce new levies.
"It is not good enough to take the easy way out and raise taxes," she said in the video, which was shot last Friday at her Calgary home.
She also said that despite the financial austerity, the plan is still to invest some energy revenue in the Heritage Savings Fund in the next budget.
Redford echoed the recent comments of Finance Minister Doug Horner that Alberta is getting hit by a double whammy in the oil markets.
The vast majority of Alberta's oil comes from bitumen in the oilsands.
She said the price of that oil has always been slightly below the benchmark West Texas Intermediate price per barrel.
But she said oil production is growing south of the border and that, combined with the fact Alberta has virtually nowhere else to sell its oil, means the price spread has expanded to just over $50 a barrel.
"That gap has grown considerably and the trend is getting worse for the foreseeable future," said Redford.
Opposition critics labelled the speech, which cost $55,000 for airtime and production costs, a hollow public relations exercise.
"There was absolutely nothing in this speech tonight that should give Albertans any confidence that this premier knows how to solve the problems she created," said Wildrose Leader Danielle Smith.
"You simply cannot say we're going to keep on spending but we're going to live within our means, we won't raise taxes (and) we'll also have money left over for savings without having some detail about how you're going to get there."
Smith noted that even if energy revenues fall short $6 billion in the next budget year, the total projection is for $13 billion, which would still leave an estimated $7 billion from oil and gas.
"We still have the highest amount of total per capita revenues of any province. The problem is we've also got the highest per capita spending of any province," said Smith.
Alberta is expected to spend a record $41 billion this fiscal year.
NDP Leader Brian Mason said that given Redford won't hike levies and wants to put money away in the Heritage Fund, the only avenue left is to cut services.
"I do know that we're going to be facing significant reductions in service levels across the board, and that is in direct contradiction to a clear promise (Redford) made in the (April 2012) election," said Mason.
Liberal Leader Raj Sherman said Albertans deserve specifics rather than platitudes on the government's plan to tackle the looming shortfall.
"The government’s current position is untenable," said Sherman. "Albertans want and deserve truly courageous leadership, but the premier has yet again failed to answer any of the tough questions."
Redford announced that as one step to solving the problem, her government will speed up a review of her results-based budgeting process. That process essentially strips budgets to the bare bones and builds them back up again to make sure there is value for money.
She said she will continue her efforts to get pipelines built to the U.S. Gulf Coast and gain access to emerging markets in Asia, but admitted those are long-term projects.
Redford also announced the government will hold its first ever Alberta Economic Summit next month.
The one-day conference of business and industry leaders and academics will seek solutions to Alberta's economic challenges.
An exact date has not been set.
"The summit will not solve everything in one day, but it will allow us to continue the conversation," said Redford.
The 2012-13 budget presented by Redford's government last spring predicted an $886-million deficit but a return to surplus budgets in 2013-14.
Horner, however, has since announced a revised budget deficit forecast to be as high as $3 billion.
The house resumes sitting on March 5.
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