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By Dori Modney

Another whammy for agriculture: Natural gas price hike expected this winter

Nov 6, 2021 | 9:24 AM

LETHBRIDGE, AB. — As if dealing with hot, dry conditions during the past growing season wasn`t enough, farmers and ranchers can now expect increased heating costs this winter.

Ryan Furtas, market analyst with Alberta Agriculture and Forestry, confirms Alberta producers operating livestock barns, greenhouses and large heated shops will no doubt see their heating costs dramatically increase over the next 6 months.

“To what extent the Alberta natural gas price increases is yet to be determined, but at least the prices are at a low spot to begin with and, for the past five years, producers have enjoyed low natural gas prices.”

Lower supplies and rising demand have resulted in natural gas prices rising. In North America, there was strong demand in the summer, which resulted in less gas being put into storage for winter months, which means prices are now poised to jump, especially if there`s a colder than normal winter.

“Here in Alberta prices have risen, but so far the increase could be described as minimal. The price in September 2021 for natural gas increased to $3.87/GJ (Gigajoule), the highest price it’s been for the past five years.“

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5 year Alberta farm price for natural gas – Alberta farm input survey

Since the fall of 2016, Alberta’s price of natural gas has spent approximately 85 per cent of the time under $3.00/GJ, and 75 per cent of the time priced less than $2.50/GJ. The most recent five-year average price was at $2.42/GJ, which means the recent increase to $3.87/GJ is equivalent to a six per cent price increase.

20 year Alberta farm price for natural gas – from Alberta Farm input survey

However, Furtas says potential impending increase could be higher.

“The last time prices for natural gas were this high was in 2014, when the price spent most of the year above $4/GJ. Analysts talk about prices going to 2008 levels. If so, that would come as quite a shock, considering prices were above $6/GJ going into the 2008 commodity super cycle when prices topped out at over $10/GJ.“