High natural gas prices? Where?

The demand for natural gas has soared this year, but producers in Alberta have been unable to capitalize on higher prices (and are seeing billions lost in revenue). 

What happened: Alberta’s natural gas is kind of… stuck. Canada’s pipeline capacity and transport networks have been maxed out, restricting flows to the global market. 

  • Currently, the futures price for US natural gas (which is shipping overseas) sits at US$9.33, while natural gas futures for Alberta were only US$3.30.

According to Martin King, a senior analyst at RBN Energy, the price discrepancy alone may have cost Canada’s energy industry more than $2 billion in July and August. 

Why it matters: The cyclical (and volatile) nature of the energy industry means Canada’s producers can’t afford to sit on the sidelines when demand soars and prices hit record highs. 

Yes, but: Canadian oil companies have seen profits surge in recent months. Cenovus, Imperial Oil, Canadian Natural, and Suncor all posted jaw-dropping earnings numbers

What’s next: For now, the extreme price disparity will likely continue into September, with King telling Daily Oil Bulletin that the market remains “incredibly pessimistic.”