CALGARY, May 17, 2012 /CNW/ - Canadians will likely pay similar prices at the pump this summer compared to last, while natural gas prices and electricity wholesale prices will remain relatively low due to supply surpluses, the National Energy Board (NEB or Board) said today.
Regular gasoline is forecast to average between C$1.20 and $1.35 per litre based on the West Texas Intermediate (WTI) crude price likely averaging around US $100 per barrel. WTI is expected to continue to trade at a discount to world benchmarks as a result of ongoing supply and demand imbalances and pipeline bottlenecks in mid-North America.
The NEB anticipates natural gas prices will remain the lowest in a decade due to a record level of natural gas in storage this spring. For the next six months, the surplus will be a determining factor in gas prices, which are likely to average in the US $2 -3 per MMBtu range.
Low natural gas prices have contributed to a substantial drilling decline in the United States and Canada compared to last year. However, natural gas production in the U.S. remains near record high levels and Canadian natural gas production has only fallen slightly. A significant decrease in Canadian and U.S. natural gas production over the summer months is unlikely.
The expectation of continued low prices could encourage higher natural gas consumption this summer, in particular the increased use of gas-fired electric generation facilities.
Canadians can expect electricity market prices to be lower than average this summer. Domestic electricity markets have adequate supply and exports remain relatively strong.
Current and expected power prices in both of Canada's wholesale electricity markets, Alberta and Ontario, are much lower than one year ago. In Alberta, additional supply from wind and cogeneration projects has increased the province's reserve margin. In Ontario, surplus power levels are increasing because demand declined in 2011 due to lower economic growth. Though market prices are expected to be relatively low, consumers in some provinces will pay higher electricity prices because of regulated and contracted generation. This excludes Alberta, where pricing is significantly based on market prices.
Renewable electricity generation continues to increase. Canada's installed wind capacity passed the 5 000 MW mark in 2011. According to estimates, approximately 1 500 MW of new wind capacity will be added in 2012, mostly in Ontario, Alberta and Quebec.
The NEB is an independent federal regulator of several parts of Canada's energy industry. Its purpose is to regulate pipelines, energy development and trade in the Canadian public interest. As part of its mandate, the NEB monitors the supply of energy commodities in Canada and reports its findings. The NEB Internet site is regularly updated with new energy information for the Canadian public.
This news release is available on the NEB's Internet site at www.neb-one.gc.ca under What's New!
- National Energy Board Summer Energy Outlook 2012 Fact Sheet
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