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Economic Uncertainty Dominates Winter Energy Outlook

News Release

08/35
For immediate release
30 October 2008

Economic Uncertainty Dominates Winter Energy Outlook

CALGARY - Canadian energy markets are preparing to weather a storm this winter, and not one wrought by Mother Nature. Today's winter outlook released by the National Energy Board says that although there is sufficient supply to meet Canadian energy demand this winter, there is little certainty around market prices.

"Markets here cannot help but be affected by the current volatility of world commodity markets," said National Energy Board Chair Gaétan Caron. "What this means for Canadians is that we may see lower heating fuel costs and lower gas prices at the pump. Falling prices could also have a negative impact on the pace of production and energy infrastructure developments. However, thanks to our relatively abundant energy resources, Canada is well positioned to weather the storm much better than other economies."

Over the past year Canadians have seen the price of crude increase from about US$80 per barrel last fall, to $145 per barrel in July and then retreat to about $75. Similarly, natural gas which was trading at around $6.50/MMbtu last fall, spiked to over $13/MMBtu in July, and is now trading below $7.00 per MMBtu.

Fuel prices have been driven down by a combination of factors including a deepening global financial crisis, falling demand and a worsening U.S. and global economic outlook. In addition, strong natural gas production in the U.S. has helped to keep gas prices low while helping ensure an adequate supply of natural gas for the winter.

The current global economic situation has created a particularly volatile and uncertain environment for energy markets. A serious economic downturn may significantly impact energy demand, and in turn prices. As always, however, fuel supply disruptions or a particularly cold winter may quickly drive prices up.

On the electricity front, Canada's overall supply is expected to be adequate this winter. This reflects to some extent recent additions to electric generation capacity, particularly in Ontario and east. The supply situation is tightening in western Canada as growth in consumption has outpaced growth in generation. Industrial demand in Ontario and east is showing signs of decline, with reduced output from manufacturing and mills as economic growth slows, further alleviating concerns about the adequacy of electricity supply.

In addition, new sources of energy are factoring into the supply mix. Concerns over greenhouse gas emissions, as well as the high cost of energy in recent years, have helped to stimulate investment in new and cleaner technology. Wind power has expanded rapidly in the past few years and that trend is expected to continue. There is also renewed interest in nuclear power generation, which has led to some facilities being refurbished, rather than decommissioned.

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:

Tara O'Donovan
Communications Officer
National Energy Board
Telephone: 403-299-3371
Telephone (toll free): 1-800-899-1265
Telecopier: 403-292-5503
Telecopier (toll free): 1-877-288-8803
TTY (Teletype): 1-800-632-1663

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Date Modified:
2011-10-28