Brad Wall said the cornerstone of the government's growth plan is fiscal responsibility, so he won't accept an operational deficit.
The premier made the comments Tuesday following a state-of-the-province address to the Regina and District Chamber of Commerce.
Last week, the government released its mid-year budget update and estimated the average price of oil at US$83 per barrel to the end of the 2015 calendar year. Alberta's fresh budget figures released a day earlier showed a more conservative estimate, with the government expecting oil to trade at an average of US$75 a barrel for the rest of the fiscal year ending next March.
Wall said his government's estimate is "open to adjustment."
"If we have to budget at $65 a barrel, things are going to be tight, and we need all the third parties with government to understand that," he said. "There's this question of 'what if it goes lower?' Well, then it will be even tighter."
NDP finance critic Trent Wotherspoon has said he's concerned the government is being overly optimistic about oil prices. He added that he finds Alberta's projection a "more reasonable approach."
During his speech, Wall touted the merits of the Energy East pipeline proposal, which has been the subject of a national debate amongst premiers.
The proposed $12-billion pipeline would ship more than one million barrels of western crude daily from Alberta and Saskatchewan to oil refineries in Eastern Canada.
The Saskatchewan legislature passed a motion last week calling on Ontario and Quebec to recognize the National Energy Board as the appropriate body to review the pipeline proposal.
The motion followed comments from the Ontario and Quebec premiers, who have said greenhouse gas emissions, among other issues, should be considered in the pipeline's development.
Wall said he hasn't heard the same concerns about the greenhouse gas footprint of oil shipped to Canada from Venezuela, Algeria or Iraq.
"It seems to me that they want to hold western Canadian oil to a higher standard," he said.
He added that he spoke to Ontario Premier Kathleen Wynne about the issue and the two had "an honest and frank discussion."
"She doesn't view what they're doing as barriers to the Energy East pipeline," he said. "I don't agree."
He added that he believes transporting oil through pipelines is safer than using railways.
"Rail is not, as we know, in the starkest, most tragic terms, the safest way to move oil in this country," he said.
Wall's comments were made on the same day that Alberta Premier Jim Prentice and Quebec's Philippe Couillard met to discuss the proposed Energy East pipeline among other issues. The two leaders reiterated their respective positions in a joint news conference.