As the price of natural gas surges due to both international factors and domestic policies, it could make for an expensive winter season for Canadians, say experts.
“There are constraints in several markets and demand has shot up post-pandemic,” says Timothy Egan, president and CEO of the Canadian Gas Association (CGA).
“There’s a significant demand for gas to be exported from the United States to global markets, and so that’s had an effect on the North American prices,” Egan told The Epoch Times.
The price of nearly all commodities has been increasing as inflation climbs, with Statistics Canada reporting that the consumer price index rose 4.1 percent on a year-over-year basis in August, the fastest pace since March 2003.
“Year over year, gasoline prices rose 32.5 percent in August, mainly driven by lower production from oil-producing countries compared with pre-pandemic levels,” the agency said in a report released Sept. 15.
According to the CGA, natural gas meets 38 percent of Canada’s energy needs. Therefore the rising prices directly affect other sectors of the economy and Canadians’ personal finances.
Egan says that the CGA does not predict where prices will go but that undoubtedly the rising price of commodities is passed on to the consumer. He notes, however, that utility companies don’t make a profit on the price of natural gas.
In late June, consumers of natural gas in Ontario received a reduction on their bill, from 0.8 to 3.9 percent depending on their supplier. The Ontario Energy Board (OEB) explained that the change was caused by “downward pressure on North American natural gas prices due to higher-than-forecast storage inventory levels in North America.”
Fast forward a few months and it’s a different picture. The OEB announced in late September that the increase on gas bills starting Oct. 1 would range between 1.6 and 8.3 percent. The OEB says upward pressure on natural gas prices is now caused by “higher-than-forecast demand in North America and a slight decrease in production and supply interruptions related to Hurricane Ida.”
A large natural gas distributor in Quebec, Énergir, has also confirmed to The Epoch Times that higher prices are anticipated this winter, caused by lower production, decreased storage levels, and increased demand in Europe, Asia, and Mexico.
“In the long term, markets predict a rise in natural gas production in the United States, which should help North American prices to retreat to more sustainable levels for producers and consumers,” says spokesperson Elaine Arsenault.
Energy Policies Impacting Supply
Former MP Dan McTeague, president of Canadians for Affordable Energy, says other structural factors independent of market forces are having an impact on rising prices.
“While some suggest the rise in energy prices are understandable given post-pandemic demand, the real story is that many producers of natural gas aren’t able to make up for the surge and supplies of natural gas continue to lag,” McTeague told The Epoch Times.
“Much of this can be traced to a deliberate strategy of disinvestment by ESG [environmental, social, and governance investment] mandates. Restricting capital from producers is therefore a major reason for the near tripling of futures prices compared to the same period last year in North America.”
In Europe, where governments have placed greater reliance on intermittent sources of energy like solar and wind, market prices for natural gas have risen “10- to 13-fold year over year,” McTeague said.
Canada’s recently re-elected Liberal minority government has ambitious emissions-cutting targets. The Liberals’ platform calls climate change “a competitiveness issue for the oil and gas sector” and says the sector “must accelerate its efforts to get on a path to net-zero emissions.”
Egan and McTeague, on the other hand, highlight issues like energy security and the need to avoid energy shortage crises caused not by supply or the markets, but by governmental policy.
“In North America, we’re sitting on literally hundreds of years of supply, and anything that restricts that supply could have an impact ultimately on the customer, so we don’t want those restrictions,” says Egan.
He adds that prices go up and down on the market, but the federal carbon tax is only going up.
“Local governments need to recognize the value proposition of natural gas and look at what’s happening in other markets and say, ‘let’s make sure that never happens here.’”
McTeague says governments “need to appreciate what’s going on in Europe and Asia.”
“For a nation blessed with an abundance of clean energy, we need to encourage the oil and gas sector to thrive, especially given its indispensable role in generating growth and wealth for governments to meet our financial commitments and get the country out of the economic ditch it currently finds itself in.”