As the chilly weather continues into February, there will undoubtedly be an impact on natural gas rates for businesses around Ontario. Yet there is hope to secure energy savings, provided companies plan ahead and implement some basic strategies.
Quebec saw temperatures fall to near minus 50 degrees Celsius at the beginning of 2018, with other provinces, including Ontario, seeing similar sharp temperature drops. This led to an uptick in demand for natural gas, something the industry has not had for a while. In fact, over the past several years, with winters being less severe than usual, the natural gas supply has been piling up.
If you take a look at the numbers, as of February 2, 2018, there was 2,078 Bcf natural gas in storage. This represents a net decrease of 199 Bcf from the previous week. The amount of natural gas in storage has been about 503 Bcf lower than the same time last year and a total of 393 Bcf lower than the 5-year average, which was 2,471 Bcf. The highest amount of natural gas in storage was recorded for the week of November 11, 2016 when there was 4,047 Bcf.
Broadly, because winters have been less severe than usual, with natural gas supplies piling up, prices have fallen. More specifically, for the week ending on February 9th, 2018, natural gas prices fell to its lowest level since May 2016 (2.538 USD/MMBtu – Million British Thermal Units).
It’s important to note that because there is normally a drop in demand for natural gas in the spring due to less extreme weather, now may be the time that the natural gas industry recoups after a period of sustained low gas prices.
Active Business Services previously noted that the futures market has been considering the natural gas supplies and prices compared to five-year averages. We have also noted that, due to Canadian natural gas prices being so low, the cold weather will have a measurable impact on the industry. It will take some planning for Ontario businesses to secure energy savings, but it is not impossible.
Unfortunately, the cold weather has also been dampening the ability to replenish stocks. In Alberta, for example, some of the water and condensation in the pipes caused them to freeze, limiting the supply just as demand increases.
It is not just in Alberta that pipes have been freezing and have had to be turned off. In parts of the United States, the supply of natural gas has been limited after frozen pipes caused a reduction in production.
This has triggered a jump in prices of natural gas around the continent as demand spikes and supplies run short. In Alberta natural gas prices jumped over 70 per cent over the holidays. While in the U.S., Bloomberg reported that production had dropped about 1.4 billion cubic feet a day.
Earning Energy Savings
Ontario businesses may soon feel the pinch as well. But, being aware how to conserve energy and how to deal with increasing prices can help a company strategize its way through the Canadian winter.
Here are some tips on reducing your businesses heating costs and reap some energy savings:
-check for energy inefficiencies
-encourage employees to be energy-conscious
-have your HVAC system checked regularly
-have smart, programmable controls installed
For a fully realized energy savings, Active Business Services has a variety of techniques and plans that help businesses cut costs. These include a managed natural gas program or flexible pricing options. For more information please see our website.