‘Textbook Supply and Demand History’: Alberta Natural Gas Prices Are Rising | The Canadian News

After nearly two years of supply shortages and cost increases, the end is not yet in sight. One of the latest rising prices is natural gas.

For fifth-generation greenhouse grower Jeff Stigter, this is not good news.

He owns Jamco Growers in southern Alberta, where he grows 11 acres of cucumbers, tomatoes, and bell peppers in greenhouses. All heating used in year-round operation is natural gas.

“Utilities probably represent 15 to 20 percent of our overhead for the year,” Stigter said.

“If that goes up 25 to 30 percent, that means a big jump in our spending by the end of the year.”

Read more:

Natural gas price increases will fuel inflation and hit low-income Canadians hardest

The story continues below the ad.

According to the Alberta government, natural gas prices were $ 2.78 per gigajoule in August 2021, a 55.8 percent increase from 2016.

Thursday, Alberta Gas listed the market price of natural gas at $ 4.83 per gigajoule.

“This puts prices higher than in the last seven years with the combined price of natural gas and the carbon tax,” Stigter said.

In a statement to Global News, Big Marble Farms, another greenhouse grower in Alberta, expressed concern about rising prices.

“Obviously, we are very concerned about the impact of high energy prices,” Ryan Cramer, president of Big Marble Farms, said in the statement.

“I don’t think anyone anticipated that natural gas would increase so rapidly, and it’s one more thing that impacts the bottom line and makes it more difficult to grow local food sustainably.”

It is a financial blow that is occurring all over the world. In Europe and Asia, gas prices have more than tripled this year.

“I think it’s a textbook supply and demand story,” said Sohaib Shahid, Director of Economic Innovation, The Conference Board of Canada.

Read more:

High oven oil and propane prices could leave some Canadians struggling this winter

The story continues below the ad.

“As economies reopen around the world, there is a lot of demand for natural gas, but there is not enough natural gas for everyone. As a result, prices are increasing. “

The trickle down effect will also be felt by consumers, who could also see product prices rise.

“Gas prices are going up and to ensure that farmers are sustainable, the price of the product has to go up,” Stigter said.

“And hopefully consumers will realize that and buyers will realize that.”

Stigter adds that weather influences how much natural gas is used. Shahid echoes the statement, adding that prices will peak in the winter.

But if it is a mild winter, fewer gigajoules are used.

“When the carbon tax came along and natural gas was $ 2 per gigajoule, we weren’t too worried,” he said. “But now that gas costs $ 4 a gigajoule plus the carbon tax on top of that, that’s a substantial increase for utilities.”

Read more:

America worries about winter prices as global natural gas shortage nears borders

Shahid adds that other industries will feel the weight of the additional cost.

The story continues below the ad.

“The agricultural sector is affected because fertilizers become more expensive and food storage becomes more expensive.”

But, for Alberta’s energy sector, there is a silver lining.

“Higher natural gas prices are good,” Shahid said. “It’s also good for Alberta government revenue.

“And if in the future, many natural gas companies in Alberta spend the money they have received from higher prices on new factories, or reinvestment or new hires, that will impact and enhance Alberta’s long-term economic growth.”

© 2021 Global News, a division of Corus Entertainment Inc.



Reference-globalnews.ca

Leave a Comment