CALGARY – With North American natural gas prices soaring to levels never seen before in years, Canadians can expect to pay significantly more to heat their homes this winter.
While natural gas prices in Canada and the US have not reached the record levels currently being experienced in Europe and the UK, where supply shortages are raising the spectrum of potential outages this winter, they are still higher than they have been in more than six years. Increased economic activity, the relaxation of COVID-19 restrictions around the world, and the phasing out of coal are helping drive higher demand for fossil fuel.
At the same time, production has not kept up with demand. The uncertainties of the global pandemic have made producers reluctant to make significant capital investments in new drilling programs, and Canadian natural gas storage levels are at five-year lows. North American LNG exports are also operating at peak volume to meet global demand, depleting inventories.
“This is definitely something that doesn’t bode well for consumers, because if we have a cold winter and we don’t have a lot of stored gas to rely on, that could be a concern,” said Dulles Wang, analyst and head of the research team at Wood Mackenzie’s Canadian gas, in an interview.
“We expect to see an increase in prices for consumers this winter.”
On Thursday, Henry Hub Natural Gas’ spot price was $ 4.95 per million British thermal units, an increase of 133% from the same day last year.
Rob Roach, chief economist at Alberta Crown Corporation and Financial Institution ATB Financial, noted that it is still far from the heyday of the mid-2000s, when natural gas prices spiked as high as $ 10- $ 11 at times. .
Still, Roach said it’s been some time since we’ve seen a market for natural gas like this, and prices are likely to rise even higher before spring.
“These are not all-time highs, but in the North American market prices have been quite low in recent years,” he said. “So we’re going to feel this, as consumers. It’s going to be an expensive winter,” he said.
Several Canadian natural gas distributors have already informed their customers of the rate increases. FortisBC Energy Inc., British Columbia’s largest natural gas distributor, will increase rates starting October 1, and most customers are expected to see their monthly bills increase by about $ 8, or nine percent. .
“We don’t actually increase the cost of gas. Customers pay what we pay for the cost of the product, “FortisBC spokeswoman Diana Sorace said in an interview.
With North American natural gas prices rising to levels never seen before in years, Canadians can expect to pay significantly more to heat their homes this winter.
Enbridge Gas, which serves 3.8 million customers in Ontario, heating more than 75 percent of homes in that province, has also said it will raise rates on October 1. In a press release, the company said that the typical residential customer will see an invoice. increase from about $ 7 to $ 44 a year, depending on where they live.
Manitoba Hydro, which has already raised its rates to reflect rising raw material prices, said that a typical residential customer’s annual bill will increase by about 8.7 percent, but higher-volume customers could see increases of up to 19 percent.
Rising commodity prices, while bad news for consumers, are good news for Canada’s natural gas sector. The improvement in balance sheets should result in an increase in spending, production and employment in 2022.
“Here in Alberta, it is a great blessing to many people who work in that sector, and the side effects are quite positive for our economy,” said Roach.
But other industries, from manufacturing to agriculture, will feel the rush. Mark Reusser, vice president of the Ontario Federation of Agriculture, said natural gas is the second largest expense on his turkey farm, after feed. Every year, it pays to heat three 2,160-square-meter barns.
“I’ve spent huge amounts of money insulating and making sure they are as up to date as possible in terms of energy conservation. But you still need heat, this is Canada,” Reusser said. significant impact on my bottom line. “
This Canadian Press report was first published on September 23, 2021.