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Crude oil and gas prices expected to stay hot for summer

News Release

08/22
For immediate release
28 May 2008

Crude oil and gas prices expected to stay hot for summer

CALGARY - Oil and gas prices aren't expected to get any lower for the coming months, according to the National Energy Board's (NEB) summer outlook for Canada's energy markets.

According to the outlook, which gives a market overview of oil, natural gas and electricity, the price of crude oil is not likely to ease through the summer - averaging in the area of US$130 per barrel. The oil market continues to be tight with supply and demand closely matched. Some of the main reasons the NEB predicts the price of oil will remain high 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, which are strongly influenced by crude oil prices, will also remain high and continue to reflect changes in the price of crude oil.

"Global oil prices continue to rise," says NEB Chair Gaétan Caron. "What happens in world crude oil markets this summer will largely determine the price of gasoline in both Canada and the U.S.," he added.

Natural gas prices are rising as well, and have more than doubled since last fall. Prices are expected to remain between $US 11-13 per million British thermal units (MMBtu) this summer. This is due in part to record crude oil prices, lower liquefied natural gas (LNG) imports into North America, declines in Canadian production, a greater volume of gas needed to refill storage and the usual uncertainty of potentially hot summer weather.

Stronger production in the U.S. helps offset current production decreases in Canada. 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).

Provinces and territories should have an adequate supply of electricity to meet summer loads but this is subject to uncontrolled circumstances, including extreme weather events or unplanned transmission outages. In the realm of pricing, 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 as well to enhance reliability and access to nearby markets and to address increased demand and aging infrastructure concerns.

The NEB is an independent federal agency that regulates several parts of Canada's energy industry. Its purpose is to promote safety and security, environmental protection, and efficient energy infrastructure and markets in the Canadian public interest, within the mandate set by Parliament in the regulation of pipelines, energy development and trade. As part of its mandate, the NEB monitors the supply of all energy commodities in Canada and reports its findings. The NEB Internet site is regularly updated with new energy information for the Canadian public.

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For further information:

Lauren Hopkins
Communications Officer
National Energy Board
Telephone: 403-299-3712
Telephone (toll free): 1-800-899-1265

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Date Modified:
2011-10-28