‘Markets go crazy’ – Toronto residents can expect rising heating bills and fuel costs as the global energy system struggles

Winter is coming, and so are expensive heating bills.

As North American natural gas prices hit levels never seen before in years, experts say Toronto residents can expect to pay a large premium for their heating, electricity and fuel costs.

Enbridge Gas, which heats more than 75 percent of homes in Ontario, already raised its rates on October 1. A typical customer who heats their home with natural gas will see their annual bill increase between $ 57 and $ 81 per year depending on where they live, the company said in a statement.

Prices could continue to rise throughout the winter, experts say. The Ontario Energy Board, which regulates energy prices in the province, reviews energy prices every three months and increases them if necessary. If the drop in LNG supply does not diminish, analysts say the province could see another increase in January.

The OEB says the Enbridge rate hike is associated with upward pressure on natural gas prices in North America “due to higher-than-anticipated demand in North America.”

The board also attributed the increase to a decline in production and supply disruptions related to Hurricane Ida, which hit the United States a month ago.

Those supply disruptions extend to oil and energy production, which means that fuel and electricity prices may also see an increase.

“I would anticipate some pretty big increases in what consumers pay this winter, if we see prices stay around these current levels,” said Douglas Porter, chief economist at BMO.

The price increases are the result of a recent crisis in the global energy system that has seen the prices of natural gas, oil and coal rise rapidly in recent months. Increased economic activity, relaxation of COVID-19 restrictions, and colder weather have led to an increase in demand in North America.

Meanwhile, supply levels have dropped. Canadian natural gas in storage is at a five-year low as North America’s LNG (liquefied natural gas) exports, struggling to keep up with global demand, have depleted local inventories.

North American energy producers, recalling the drop in prices at the beginning of the pandemic, have been reluctant to boost production to levels that could drive prices down.

Price increases in North America are relatively moderate compared to the energy crisis in Europe and Asia, where countries that pulled out coal experienced a dismal year for wind production and Russia cut back on its much-coveted supply to the continent.

But the global turmoil in energy markets will have local repercussions, experts say.

“It’s a lot of bad luck at the same time,” said Rory Johnston, a market economist at Price Street Inc.

“Long winters in Europe and Asia, as well as an extremely hot summer in North America, contributed to a massive increase in demand for natural gas. So to begin with, we are already entering the colder seasons with a relatively low level of natural gas. If we add to that all the effects that the pandemic has had on the economy, plus the lower supply of gas from Russia, the markets go crazy. “

The benchmark price of US oil rose nearly 3 percent this week to about $ 78 a barrel, a seven-year high, after the Organization of Petroleum Exporting Companies cartel refused to increase its offer.

Automotive fuel is also seeing a significant price increase. Dan McTeague, president of Canadian for Affordable Energy, projects gasoline prices at pumps in the greater Toronto area to hit $ 1.50 per liter in the coming weeks, up from 44 percent a year ago.

“We’re not going to see price increases anywhere close to what we’re reading in places like Europe and Asia, but that doesn’t mean we’re not going to save ourselves entirely either,” Porter said.