Gasoline prices may spike again as oil prices are forecast to bounce back
After an extraordinary level of attention has been focused on energy prices over the last 12 months, the spotlight will likely continue during the year ahead
As the Russian invasion of Ukraine caused commodity prices to spike, fuelling a sharp rise in inflation, concerns over energy security (new window) became paramount, especially in Europe, leading world leaders like Justin Trudeau and Joe Biden to urge the oilpatch to ramp up production (new window) quickly
North American oil and natural gas companies weren’t able to respond to the increased demand for energy around the world as much as initially expected, even as energy supply continued to be a highly politicized (new window) global issue
And who was left feeling the pain? The consumer, of course
For much of 2022, there was month after month of sky-high prices at the pump, on utility bills, and just about everywhere else because of the trickle down effect of energy prices (new window) on inflation
We went from a once in a lifetime demand event with COVID and now this is a once in a lifetime supply event with [Russia’s invasion]
said Al Salazar, a Calgary-based energy analyst and vice-president of intelligence with Enverus
This year has not been boring by any stretch of the imagination
he said
And 2023 could be an interesting follow-up act not only because of oil prices, but many other aspects of the energy industry, such as a rapid rise in EV charging stations across Canada
Oil prices
Recently, the benchmark North American oil price, a crude blend known as West Texas Intermediate, has been down about 40 per cent from its wartime peak
That’s providing some level of relief for drivers, while also slowing down the rate of inflation
Unfortunately, it could be short-lived
Many countries don’t have much of a stockpile of oil, and refined fuels like gasoline and diesel could cause prices to spike, Salazar said, especially when combined with the expectation that the economic slowdown may be relatively minor
You’re running on empty going into next year
he saidWe see [oil prices] going into the hundreds next year and staying there
In a recent report, energy forecasters at RBC Capital Markets are anticipating oil prices around $100 US per barrel for both 2023 and 2024, which they said may appear lofty
but is based on supply, demand and the general lack of investment in producing more oil
Fuel prices
Filling up your tank hasn’t been as dreadful lately as it was several months ago
Average gasoline prices across the country have been around $1.40/litre in recent weeks, compared to a peak in June of about $2.14
Diesel prices (new window) have fallen slightly from a high of about $2.30/litre in November to just above $2 to end the year
A rebound in oil prices would cause those fuel prices to bounce upward again, which would also impact food prices and inflation, in general
Speaking of oil and gas, two multi-billion-dollar pipeline projects in Western Canada could be completed in the next 12 months, after years of delays and cost overruns
The Trans Mountain expansion pipeline would essentially twin the existing oil export pipeline from Alberta to the West Coast. The project has faced considerable opposition, along with financial and legal challenges (new window). The federal government purchased the project in 2018 (new window) and some Indigenous groups are still pursuing potential ownership. Construction is about 75 per cent complete
It will be the final major pipeline that’s coming on-stream of all the projects that, if you pardon the pun, were in the pipeline in the first place
said Rory Johnston, founder of the Commodity Context newsletter, as he referenced several failed oil pipeline proposals in the last decade such as Energy East, Northern Gateway and Keystone XL
After that, there are no other projects that have been discussed,
he said
Meanwhile, the Coastal GasLink pipeline, which would transport natural gas from northeastern British Columbia to the coast, is part of the LNG Canada export facility that is still a few years from completion. Coastal GasLink (new window) has faced its share of opposition and challenges and at this point, construction is about 80 per cent complete
Both pipeline projects are expected to be finished in 2023, although considering their history of delays (new window), it wouldn’t be much of a surprise if work continues into 2024
Green power
The country’s wind and solar power industries are expecting 2023 to be another banner year
Canada’s largest solar project, Greengate Power Corp.’s $700-million Travers development in southern Alberta, began producing power in 2022 and is expected to be complete by the end of 2023
It’s just one of several large green energy projects across the country that will increase the amount of solar and wind electricity
Much of that growth is in Alberta, where solar and wind produce about 26 per cent of the electricity in the province
Solar generation in the province is now at the level the Alberta Electricity System Operator had forecast last year would not be reached until 2033, the Globe and Mail recently pointed out (new window)
The number of electric vehicle charging stations across the country is set to grow yet again in 2023
The growth is particularly noteworthy for those who are considering the purchase of an EV but have some anxiety about running out of power on the highway
Several companies have announced growth plans
Parkland Corp. wants to build one of Western Canada’s largest ultra-fast electric vehicle charging networks by doubling the number of charging stations from Vancouver Island to Calgary
Recently, Shell and Petro-Canada also announced plans focused on EV charging as part of a long-term strategy to boost revenue and offset anticipated lower gasoline sales in the future
Gosh, there’s almost an announcement every day
about new charging stations, said Cara Clairman, CEO of Plug’n Drive, a non-profit organization encouraging the use of electric vehicles
There are already more than 8,000 EV charging stations available to the public, according to Natural Resources Canada
In terms of public infrastructure, it’s not really a real barrier to adaption [of EVs] at this point
Clairman said, especially considering most people charge at home
The biggest gap is multi-unit residential. It’s pretty easy to put a charger in at home if you live in a single-family home. Where it is not easy, is if you live in multi-family units. Sometimes it’s costly, sometimes it’s not even possible
she said
CBC News
