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Updated: Sun, 02 Feb 2014 11:54:53 GMT | By CBC News, cbc.ca

'Shocking' natural gas prices expected to continue to rise



Natural gas rates are going up in Manitoba, tacking on about $50 for the average customer. Shutterstock

Natural gas rates are going up in Manitoba, tacking on about $50 for the average customer. Shutterstock

Natural gas customers in New Brunswick and Nova Scotia who were facing record bills in January are being warned to expect another wave of increases in February, the fifth increase in the price of natural gas since September.

Daniel Picard's natural gas meter didn't record any unusual consumption at his Fredericton townhouse in January, so his record natural gas bill caught him off guard.

"I had never seen $400. I have seen maybe $250 or $200," he said. "That's shocking."

Picard is among thousands in the region coping with runaway natural gas prices that have ambushed northeastern North America this winter, according to New Brunswick government energy consultant Jon Sorenson.

"We've seen a record world price — the highest price we've seen for natural gas in the world from New Jersey to Nova Scotia. It's been like a horror movie," Sorenson said.

In Halifax, Heritage Gas passed along gas price increases of 110 per cent between September and January. That’s a bargain compared to New Brunswick, where prices quadrupled for customers of Irving Energy and quintupled for customers of Park Fuels.

Enbridge executive Gilles Volpe said buying gas on spot markets this winter has been like high-stakes roulette.

"Within two or three days we saw price swings from $5 to $75," he said.

Dave Young with New Brunswick's Energy and Utilities Board is warning even worse is on the way.

"The prices you had in January are very likely to be higher in February, so consumers should take whatever action they think they can take to prepare for that," said Young.

Low inventories

Natural gas is the most widely-used form of heating on the continent, used in about half of all homes. The second-most common — electricity — is also vulnerable to the price of natural gas because many power plants that generate electricity are gas-powered.

"This winter looked to be slightly colder than normal, but no one was really screaming for this kind of cold weather,” said Aaron Calder, a market analyst at Gelber & Associates.

All the cold air is resulting in a draw-down of supplies of gas in storage. They’re down 20 per cent from where they were this time a year ago, the U.S. Department of Energy said last month.

At the same time, drillers are struggling to produce enough to keep up with the demand for new gas.

The supply situation has been exacerbated by the fact that in the past, much of the gas production was in the Gulf of Mexico. There, weather only plays a role during the Atlantic hurricane season in the summer and fall.

New sources of gas are on the mainland and they’re vulnerable to freezing, ice and snow. Wells that are not designed for such extreme conditions can freeze, halting production.

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