No matter the temperature, there will be no fuel worries this winter in Canada — high storage levels of natural gas will be more than adequate to meet heating demand, according to the National Energy Board (NEB) winter outlook.
The outlook issued last week highlighted how storage supplies, extreme winter conditions and geopolitical events may impact energy prices in the coming months.
Natural gas futures prices in North America are expected to hold steady in the US$6.00-8.00/MMBtu range, but if the winter is exceptionally cold, the price could rise above that range, according to the NEB. Stronger production in the United States and imported liquefied natural gas are expected to offset production decreases currently occurring in Canada.
On the crude oil side, the NEB expects prices to remain high throughout the winter, in the US$75-80/bbl range, but a continuing rising price risk exists because of tightening supply inventories. The price for heating oil is expected to track with the price of crude.
“Energy price volatility is the only certainty,” said NEB Chair Gaetan Caron. “We can never know for sure whether it will be a cold winter, or what events may occur in the world.”
Canada’s provinces and territories also are forecasted to have sufficient electricity supply to meet winter demand loads, unless they encounter extreme weather events or unplanned outages on their electricity grids. Most of the provinces’ grids reach peak electricity use in the winter months. The provinces that generate most of their electricity from hydro (Quebec, British Columbia, and Manitoba) have increased water levels behind their hydroelectric dams in anticipation of high electricity use for winter heating, according to the NEB.
However, geopolitical events are “always a factor in energy price outlooks,” noted the NEB. In mid-October oil prices crested to new record highs driven by a combination of market speculation, Middle East political tensions, weakness of the U.S. dollar and persistent refinery bottlenecks. However, even with high crude oil prices, Canadian consumers “are not likely to see high prices at the gas pumps until spring 2008.”
To view the NEB’s outlook, visit www.neb-one.gc.ca.
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