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.”