‘Textbook supply-and-demand story’: Natural gas prices in Alberta are rising

After nearly two years of provide shortages and value will increase, the top nonetheless isn’t in sight. One of many newest costs on the rise is pure gasoline.

For fifth-generation greenhouse grower, Jeff Stigter, it isn’t excellent news.

He owns Jamco Growers in southern Alberta, the place he grows 11 acres’ value of cucumbers, tomatoes and peppers in greenhouses. All of the heating used within the year-round operation is pure gasoline.

“Utilities are most likely 15-20 per cent of our general bills on the 12 months,” mentioned Stigter.

“If that will increase 25-30 per cent, that’s an enormous leap to our bills by the top of the 12 months.”

Learn extra:
Natural gas price hikes will fuel inflation and hit low-income Canadians the hardest

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In line with the government of Alberta, pure gasoline costs had been $2.78 per gigajoule in August 2021, a 55.8 per cent improve from 2016.

On Thursday, Gas Alberta listed the market worth of pure gasoline at $4.83 per gigajoule.

“This places the costs greater than within the final seven years with the mixed pure gasoline pricing and the carbon tax,” mentioned Stigter.

In a press release to International Information, Huge Marble Farms, one other greenhouse grower in Alberta, expressed its concern with the hovering costs.

“We’re clearly very involved concerning the affect of excessive power costs,” mentioned Ryan Cramer, president of Huge Marble Farms within the assertion.

“I don’t assume anybody anticipated pure gasoline spiking this shortly, and it’s yet one more factor that impacts the underside line and makes it harder to develop native meals in a sustainable vogue.”

It’s a monetary hit that’s happening all over the world. In Europe and Asia gasoline costs have greater than tripled this 12 months.

“I believe it’s a textbook supply-and-demand story,” mentioned director of Financial Innovation, The Convention Board of Canada, Sohaib Shahid.

Learn extra:
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“As economies reopen the world over, there’s loads of demand for pure gasoline however simply not sufficient pure gasoline to go round. Consequently, costs are rising.”

The trickle-down impact can even be felt by customers, who may see costs of products go up as properly.

“Gasoline costs go up and to make sure farmers are sustainable, the worth of the product has to go up,” mentioned Stigter.

“And hopefully customers understand that and the consumers understand that.”

Stigter provides that climate performs a task in how a lot pure gasoline is used. Shahid echoes the assertion, including that costs will peak within the winter.

But when it’s a light winter, much less gigajoules are used.

“When the carbon tax first got here in and pure gasoline was at $2 per gigajoule, we weren’t too fearful,” he mentioned. “However now that gasoline is at $4 per gigajoule plus carbon tax on prime of that, that’s a considerable improve to utilities.”

Learn extra:
U.S. worries about winter prices as global natural gas shortage nears borders

Shahid provides that different industries will really feel the burden of the added value.

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“The agricultural sector is affected as a result of fertilizer turns into dearer and storing meals turns into dearer.”

However, for Alberta’s power sector, there’s a silver lining.

“Larger pure gasoline costs are good,” mentioned Shahid. “There additionally good for the Alberta authorities’s income.

“And if going ahead, loads of pure gasoline corporations in Alberta spend the cash they’ve acquired from greater costs in direction of new factories, or reinvestment or new hiring, that can affect and enhance Alberta’s long-term financial progress.”

© 2021 International Information, a division of Corus Leisure Inc.

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