Whether it’s heating your home or filling up your vehicle, Canadians saw gas and oil prices hit record highs last year. Experts say 2023 won’t be much different.
According to a new report from Deloitte that estimates oil and gas pricesEdmonton City Gate, a benchmark crude CanadaIt is expected to sit at $101.35 a barrel.
West Texas Intermediate, a benchmark crude oil in the North American market, is forecast at US$80 a barrel for 2023, said the report released on January 9.
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“We are going to see increased prices across the country. It is a very expensive time,” Andrew Bottrill, Canada’s national leader for energy and chemicals at Deloitte, told Global News.
“We expect to see relatively high oil prices through the year. And, to be honest, natural gas is really a similar story,” Bottrill said.
“Unfortunately, as consumers, it will probably be more expensive to heat our homes and fill our tanks.”
While increased costs are projected across the country, according to Bottrill, provinces such as Alberta and Saskatchewan could see a slight reduction in prices due to their proximity to lots of production facilities.
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Oil prices have been increasing for the last few years. In 2021, oil is set to jump 3.4 percent compared to a year ago, according to a Deloitte report. There was an increase of 6.7 percent in 2022.
According to Botterill, during the better part of two years COVID-19 Pandemic, oil and gas sectors reduced demand.
“It meant that a lot of oil companies didn’t invest and put money into bringing new drilling opportunities and new production online,” he said.
Botterill said demand has picked up where it was before the pandemic, or even higher, once Covid restrictions are lifted and life returns to some degree of normalcy.
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“We are seeing most parts of the world out of the Covid pandemic and demand is picking up,” he added.
coupled with ukraine According to Bottrill, the struggle, which seems to have no end in sight, is expected to keep prices stable.
“(It) took a lot of volumes that came out Russiaboth natural gas and oil, and essentially neutralizing them or taking them off the market,” he said.
According to a Deloitte report, price uncertainty has increased after European countries in coordination with the G7 and Australia imposed a price cap on offshore Russian crude oil at US$60 per barrel.
Price cap also effectively targets countries China, India And turkeyWhich will become the main customer of Russian crude oil, the report said.
Russia, the world’s second-biggest oil exporter, has said it will not sell oil to countries that have accepted the cap.
Werner Entweiler, professor of economics at the Souder School of Business at the University of British Columbia, expects sanctions against Russia to remain in place until 2023, and estimates that supply will be “significantly” affected.
With countries moving away from Russian oil, Entweiler expects to see “interesting reshuffle in the markets.”
“This shuffling means that a lot of countries are scrambling to get supplies from suppliers who are perceived to be safer and more reliable,” Entweiler told Global News.
Prices to remain ‘volatile’
“This rerouting will probably have an impact on prices,” Entweiler said.
He added that prices would “increase” and remain “volatile”.
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“A lot is possible on the global political stage, from tensions in Korea to tensions in the Straits TaiwanEntweiler said.
“All these things are conceivable, but of course, we don’t know whether they will happen or not and so we need to be prepared that we are living in a more volatile world. We need to think and anticipate That there will be significant disruption in the supply of energy coming from this uncertainty with which we live in the globalized world.
According to Bottrill, China’s reopening economy after the easing of Covid restrictions could have a “significant” impact on energy needs in 2023.
“As we watch China begin to open up its economy, will we see another wave of need to initiate more investment or drive volumes in different directions? I think we can be,” he said.
“It’s going to create a whole new chain of supply and demand constraints, for sure.”
As far as natural gas price hikes go, it’s a “really similar story,” Bottrill said.
Natural gas production in Canada has been on a steady rise since the end of 2020, according to a Deloitte report.
“But higher prices in 2022 have not led to the increase in supply that one had expected,” the report said.
Now, the lack of momentum in gas drilling and related production reflects a lack of certainty about future prices.
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“Inflationary pressures” on domestic heating costs are also likely to continue as supply appears unlikely to increase significantly.
According to the report, “With continued geopolitical uncertainty, the first quarter of 2023 is likely to be as volatile as the past few quarters, but with the added concern of a cold snap.”
Like other commodities, diesel is also expected to see higher prices in 2023.
“Diesel pricing is strategic,” said Dan McTeague, president of Canadians for Affordable Energy.
“It’s the fuel that is the global workhorse, and it’s about to go a lot,” he said.
speaking on roy green show On Sunday, McTeague predicted diesel prices this year to mimic 2022.
“We’re going to watch a replay,” he said.
“I think we’re looking at $2.75 a liter for diesel this summer.”
According to McTeague, a big reason for these expensive prices is very strong demand.
“Post-COVID, economies are going to pick up. We use diesel for everything, from heating to fertiliser, to jet fuel,” he said.
Canada can do ‘little’
Jean-Thomas Bernard, professor of economics at the University of Ottawa, doesn’t expect oil or gas prices to drop much in 2023.
“Oil is a commodity that is traded all over the world. It is the most traded commodity,” he told Global News.
According to Barnard, with the price of fuel set globally, Canada has “little control” over how prices are achieved.
However, oil demand is expected to decline in the future as Canada aims to help combat climate change and cut fossil fuel use, Bernard said.
According to Bottrill, while many thought Canada could bring about a greater energy transition, companies have been looking to “hoard cash, shore up their balance sheets and ensure they remain financially sound” to prepare for potential volatility. Strong,” decided.
“We shouldn’t expect companies to go out and increase budgets dramatically. I think they’re investing in things like new technologies. They want to move toward low-carbon technologies. They’re looking to help with carbon capture and sequestration.” want,” he said.