The price of all energy types – furnace oil, propane, natural gas, gasoline, and coal – has been increasing over the past few months globally, nationally, and locally. Energy forecasters are expecting continued high prices for most types of energy during the upcoming heating season and Nova Scotians can expect to see higher energy prices over the winter months, and into 2023. As we continue to see inflation affect various everyday commodities, the winter ahead in an uncertain time for us all.
What’s causing an increase in natural gas prices?
We’ve seen a trend of increased energy prices over the past few months. When it comes to natural gas, a large part of this has to do with the sustained high demand for North American liquefied natural gas (LNG) – super-cooled natural gas that is stored in insulated tanks, for shipping to foreign markets.
The energy crisis in Europe is the primary driver for higher natural gas prices. The war in Ukraine has driven unprecedented demand for non-Russian natural gas as Russia has historically been a critical natural gas supplier to Europe. Many European countries are trying to move away from the Russian gas supply and secure LNG exports from other parts of the globe, like North America.
Aside from the energy crisis, inflation has risen dramatically in the past year, weakening the Canadian dollar, and driving higher prices for consumer goods such as groceries, fuel, etc. These global events have significantly increased international demand for natural gas, especially in Europe. To meet this demand the U.S. and Canada have increased liquified natural gas (LNG) exports to Europe, resulting in a spike in LNG prices. Natural gas prices in the Northeast U.S. and Canadian markets are highly correlated to global LNG prices, resulting in a significant increase in natural gas prices over the past summer and higher forward prices for natural gas during the Winter of 2022-23.
What does this mean for customers?
Eastward Energy will continue to take measures to secure a reliable and affordable supply of natural gas for our customers. Over the last several years, we have secured long-term transportation contracts (15+ years) to bring natural gas to Nova Scotia from regions of North America where natural gas prices are more stable and affordable. These contracts are helping to protect our customers from even higher price increases as these natural gas supply sources demonstrate lower prices and reduced volatility.
While we anticipated higher natural gas prices, last winter relative, to prior years, milder than normal winter temperatures resulted in lower natural gas prices than forecasted last winter.
Fortunately, several factors have provided some natural gas price relief over the past 2 months – reduced demand has resulted in higher natural gas storage levels than forecast, storage levels in the European Union are high, and a warmer-than-average Fall in much of Eastern North America and Europe has lowered demand for natural gas.
How can you prepare?
We encourage our customers to budget for higher energy costs this winter as high costs are forecasted to persist. Installing programmable thermostats, energy-efficient heating equipment, and additional insulation will all help to reduce energy use now, and over the long term.Back to News