CALGARY — The National Energy Board sees a bit of a mixed bag when it comes to home heating costs this winter.
In its annual Winter Outlook, the NEB said Tuesday that energy prices in the coming months will be driven in large part by the strength of the global economic recovery.
“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,” NEB chairman Gaetan Caron said in a statement.
“But with surplus inventories for all our energy commodities, we are well positioned to handle any increased demand,” Caron said.
Among other things, the federal energy regulator said it expected crude oil prices to remain in the range of US$75 to US$80 a barrel over the winter.
But because the price of home heating oil closely tracks the price of crude, average heating oil prices this winter are expected to be higher than last year when crude averaged about US$46 a barrel.
On the other hand, robust inventories of natural gas going into the winter heating season mean lower prices for Canadians who heat their homes with natural gas.
“Weak demand and high storage inventories have kept natural gas prices low,” the NEB said, adding that Canadians can expect to see prices between US$4 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,” the NEB said.
It added that because of low natural gas 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,” it said.
The NEB also says reduced demand and spare capacity mean low wholesale prices 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.”
Meanwhile, the NEB said Canada’s energy supply mix continues to diversify, with natural gas-fired generation of electricity expected to reach nearly 15 000 megawatts by year-end, a 50 per cent increase since 2007.
Wind power generation is expected to surpass 3 700 megawatts by year-end, more than double the capacity in 2007, the NEB said.