No end in sight for rising natural gas prices
Thanks to a hotter than usual summer and surging global demand for natural gas, energy experts say it will cost more to heat Alberta homes this winter.
Canoe Financial senior portfolio manager and director Rafi Tahmazian said when he looks at the last five years, there was a down trend in natural gas prices that resulted in less production and investment in the industry.
Flash forward to 2021 and a hot summer, meaning home owners using more natural gas than usual to cool their homes, and a perfect economic storm of sorts is created to produce high winter prices.
"It's (summer) not typically when you use more gas," said Tahmazian. "It's usually in the winter so we were using a lot of gas, we were not in a position to have built out that infrastructure because of lower prices earlier so multiple factors are starting to layer onto each other."
Combine that with an increase in worldwide demand for natural gas and massive storms hitting the gulf coast slowing production in the U.S. and Tahmazian says that spells bad news for consumers.
"We're coming into winter when we need it the most and we don't have the gas in storage so crossing your fingers and hoping for a warm winter is not a good investment strategy," said Tahmazian. "That's sort of the panic that goes on and people start chasing gas now in anticipation of higher gas prices in the winter."
UPSIDE FOR ALBERTA
But there is an upside. Higher oil and gas prices likely means more jobs for Albertans in the sector according to Ahmed Borhot, regional operations leader with Manpower Alberta.
"A lot of project work is coming back up, a lot of refineries which shut down turnarounds, a lot of camp work is coming back up," said Borhot. "So we are seeing a direct correlation? Would I say it's a direct cause and effect of that? Hard to say (for sure), but definitely there is a correlation between the two, yes."
Increased natural gas costs will also benefit provincial coffers.
"What does it mean to you as an Albertan? It means that our government is going to get more royalties and more tax dollars," said Tahmazian. "That's a healthy thing for our economy too so there's a give and a take to that (as well)."
ENMAX says it's seeing more customers opting for fixed gas options in 2021 compared to a year ago and adds customers are switching as a result of a number of factors, including price.