Economic Recovery will drive Energy Prices and Demand

09/23
For immediate release
3 November 2009

Economic Recovery will drive Energy Prices and Demand

CALGARY - Energy prices this winter will be driven in large part by the strength of global economic recovery the National Energy Board (NEB) said today in its annual Winter Outlook.

"With renewed signs of economic recovery in Canada and around the world, and with the winter heating season under way, energy demand is expected to grow," said NEB Chair Gaétan Caron. "But with surplus inventories for all our energy commodities, we are well positioned to handle any increased demand."

Canadians can expect to see crude oil prices between US$75 and US$80 per barrel over the winter. With the price of home heating oil closely tracking the price of crude, average Canadian heating oil prices this winter are expected to be higher than last year, when crude averaged about US$46 per barrel.

With robust inventories of natural gas going into the winter heating season, Canadians can expect to see prices between US$4.00 and US$5.50 per million British thermal units over the winter period. Sustained cold weather or a strong economic recovery could push prices above that range but, on average, Canadians who heat their homes with natural gas will pay less this winter.

Weak demand and high storage inventories have kept natural gas prices low. As a result of low prices, drilling activity in Canada and the U.S. is roughly half the levels of previous years. This will lead to a small reduction in supply over the winter, which should help rebalance the market later in 2010.

The supply situation is no different when it comes to electricity in Canada. As a result of reduced demand and spare capacity we will see low wholesale prices and adequate supply for electricity this winter. It is clear that the economic slowdown had an impact on electricity trade, which is down nearly 30 per cent below the record levels set one year ago.

Canada's energy supply mix continues to diversify. 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. Natural gas-fired generation in Canada is expected to reach nearly 15 000 megawatts by year end, a 50 per cent increase since 2007. In addition, wind power generation is expected to surpass 3 700 megawatts by year end, more than double the capacity in 2007.

Celebrating 50 years of regulatory leadership, 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 (tara.odonovan@neb-one.gc.ca)
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

Related documents:

• Energy Market Overview - We expect a return to growth in energy demand to follow an economic recovery - Winter Energy Outlook 2009/2010
• Winter Energy Outlook 2009 - We expect a return to growth in energy demand to follow an economic recovery - Presentation