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

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Natural gas prices in Alberta are rising
WATCH ABOVE: Natural gas prices are surging, and with winter on the horizon, southern Alberta greenhouses could be facing some increased costs. As Jessica Robb reports, those costs will most likely be passed on to the consumer – Oct 22, 2021

After almost two years of supply shortages and cost increases, the end still isn’t in sight. One of the latest prices on the rise is natural gas.

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

He owns Jamco Growers in southern Alberta, where he grows 11 acres’ worth of cucumbers, tomatoes and peppers in greenhouses. All the heating used in the year-round operation is natural gas.

“Utilities are probably 15-20 per cent of our overall expenses on the year,” said Stigter.

“If that increases 25-30 per cent, that’s a big jump to our expenses by the end of the year.”

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According to the government of Alberta, natural gas prices were $2.78 per gigajoule in August 2021, a 55.8 per cent increase from 2016.

On Thursday, Gas Alberta listed the market price of natural gas at $4.83 per gigajoule.

“This puts the prices higher than in the last seven years with the combined natural gas pricing and the carbon tax,” said Stigter.

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In a statement to Global News, Big Marble Farms, another greenhouse grower in Alberta, expressed its concern with the soaring prices.

“We are obviously very concerned about the impact of high energy prices,” said Ryan Cramer, president of Big Marble Farms in the statement.

“I don’t think anyone anticipated natural gas spiking this quickly, and it is one more thing that impacts the bottom line and makes it more difficult to grow local food in a sustainable fashion.”

It’s a financial hit that’s taking place around the world. In Europe and Asia gas prices have more than tripled this year.

“I think it’s a textbook supply-and-demand story,” said director of Economic Innovation, The Conference Board of Canada, Sohaib Shahid.

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“As economies reopen across the world, there’s a lot of demand for natural gas but just not enough natural gas to go around. As a result, prices are rising.”

The trickle-down effect will also be felt by consumers, who could see prices of goods go up as well.

“Gas prices go up and to ensure farmers are sustainable, the price of the product has to go up,” said Stigter.

Stigter adds that weather plays a role in how much natural gas is used. Shahid echoes the statement, adding that prices will peak in the winter.

But if it’s a mild winter, less gigajoules are used.

“When the carbon tax first came in and natural gas was at $2 per gigajoule, we weren’t too worried,” he said. “But now that gas is at $4 per gigajoule plus carbon tax on top of that, that’s a substantial increase to utilities.”

Shahid adds that other industries will feel the weight of the added cost.

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“The agricultural sector is affected because fertilizer becomes more expensive and storing food becomes more expensive.”

But, for Alberta’s energy sector, there is a silver lining.

“Higher natural gas prices are good,” said Shahid. “There also good for the Alberta government’s revenue.

“And if going forward, a lot of natural gas companies in Alberta spend the money they’ve received from higher prices towards new factories, or reinvestment or new hiring, that will impact and improve Alberta’s long-term economic growth.”

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