National Energy Board Coat of Arms
Symbol of the Government of Canada

National Energy Board

www.neb-one.gc.ca

Breadcrumb

Home > News Releases > News Releases 2008 > Crude oil and gas prices expected to stay hot for summer

Crude oil and gas prices expected to stay hot for summer

Fact Sheet

28 May 2008

Oil

Oil prices expected to remain high over summer months

It is unlikely that the price of crude oil will ease over the summer outlook period averaging in the area of US$130 per barrel. The chart below shows the dramatic increase in crude oil prices, particularly since last May when prices were trading in the area of $65 per barrel.

Crude Oil Prices: High and Volatile

The oil market continues to be tight with supply and demand closely matched. Some of the main reasons why we expect the price of oil to remain high over the next few months include seasonal demand increases, geopolitical risks to supply, low spare producing capacity and the weakness of the U.S. dollar, which is resulting in more investment money flowing into commodities, including oil.

Gasoline prices will also remain high and continue to reflect changes in the price of crude oil.

Natural Gas

Natural Gas prices double since last fall

Natural gas prices have more than doubled since last fall. Prices are expected to remain between $US 11-13 per million British thermal units (MMBtu) this summer.

Natural Gas Pricing

There are several factors which contribute to a higher natural gas price, including record crude oil prices, lower liquefied natural gas (LNG) imports, declines in Canadian production, a greater volume of gas needed to refill storage and the usual uncertainty of potentially hot summer weather.

Natural Gas Supply

Canada + U.S. Lower 48 Natural Gas Supply

Due to lower drilling, Canadian gas production is declining and is roughly 1 billion cubic feet per day (Bcf/d) lower than last year. Lower LNG imports and declines in Canadian gas production are being offset by higher U.S. production. This means that there will be a more than adequate supply of natural gas to meet summer demand and to store for the winter heating season. Storage inventories are expected to refill to around 95 per cent of last year's peak of 4.1 trillion cubic feet (Tcf).

As storage fills in Europe over the summer, more LNG should also become available in North America – peaking at an estimated 2.5 Bcf/d in August and Sept. LNG imports over the summer are expected to average 1.9 Bcf/d, about 27 percent less than last summer.

Electricity

Adequate electricity supply this summer

Provinces and territories should have an adequate supply of electricity to meet summer loads subject to uncontrolled circumstances, including extreme weather events or unplanned transmission outages.

Electricity Supply is Adequate

Pressures on electricity prices

If natural gas prices continue to increase substantially, we could see upward pressures on electricity prices this coming summer, particularly in regions that have natural gas fired electricity generation, including Ontario and Alberta.

There are several electric power line expansions being planned across the country to enhance reliability and access to nearby markets as well as address increased demand and aging infrastructure concerns.

 

Footer

Date Modified:
2011-10-28