Summitt Energy offers consumers options to lock-in low

MISSISSAUGA, ON, Jan. 27, 2012 /CNW/ - This heating season we are seeing natural gas prices at 10-year lows. Due to a combination of several factors; including over production and warm weather this winter season, a decline in natural gas demand has left it cheap and readily available. With less demand and high availability, the cost of natural gas has decreased. It is during these periods where a fixed-rate price plan becomes advantageous, before corrective action is taken to start driving prices back up. The decrease in prices has resulted in drilling companies announcing cut-backs in production; at least until natural gas pricing rebounds, to allow for higher output to be more cost-effective. These actions typically contribute to the increase in natural gas prices. As natural gas drilling is reduced, the less available it will become - putting pressure on pricing once again.

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The Globe and Mail
Monday, January 23, 2012
Rob Carrick

The same events that have rocked the financial world are also presenting opportunities for us to exert some control over the cost of living.

Natural gas prices are a good example. They’ve hit 10-year lows recently thanks mainly to a combination of new production coming on stream, a warm winter and a decline in demand related to global economic weakness. Unless you think we’re headed toward a lengthy recession that will keep the price of commodities low indefinitely, now’s a good time to lock in a natural gas price for the next five years at a very attractive rate.

One of the most disturbing things about the past few years is how vulnerable we’ve all become to financial events that are far removed from our everyday existence. The developments themselves are shocking, but so is the feeling of having no control over our lives.

Compare lock-in rates for natural gas on the Energyshop website or by Googling “natural gas contracts.” Prices vary by a surprising degree, which raises the question of whether there’s any risk in going with the lowest-cost firm.

“There’s no risk in signing up with the lowest cost provider, even if you haven’t heard of them,” Mr. MacLellan said. He argues that if your supplier goes bankrupt, its contracts would be bought by a competitor.

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The Globe and Mail
December 13, 2011

...There is no point in blaming politicians for Canada’s spectacular failure to meet its Kyoto obligations to reduce greenhouse gas emissions (GGE).

They were simply carrying out the mandate we gave them.

Notwithstanding economically illiterate attempts to pretend otherwise, higher consumer prices for GHG-emitting goods and services are an essential component of any serious attempt to reduce emissions. Counting on people to reduce GGE emissions out of the goodness of their hearts was the strategy of the Chrétien-Martin Liberal governments, and adopting this policy made Canada’s Kyoto failure inevitable long before Stephen Harper’s Conservatives came to power.

It doesn’t matter what Canadians tell pollsters about how much they are concerned with climate change; what matters is the choices we make. And whenever we have been offered the choice of accepting personal inconvenience in order to reduce greenhouse gas emissions or of making sure that fossil fuels are cheap and plentiful, we have consistently and overwhelmingly chosen the latter.

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The Globe and Mail
Friday, Nov. 11, 2011

The Obama administration’s move to sideline the Keystone XL pipeline is a major setback for relations between the world’s two largest trading partners, and threatens Canada’s role as the leading energy supplier to the United States.

The U.S. State Department’s decision to force TransCanada Corp. to explore alternative pipeline routes in Nebraska pushes out a final ruling until at least 2013, well after next year’s U.S. presidential and congressional elections.

he delay puts at risk a vital piece of the historic economic relationship that binds the world’s largest oil market and its largest supplier.

The State Department decision sent a shock wave through Canada’s energy industry, an economic stalwart of the country that has for almost six decades counted on the United States as virtually its sole export market. The first dribs of oil began to find their way across the border in 1952, when Canada sent an average 3,900 barrels a day south. That volume has grown nearly 500-fold. In 2009, Canada exported a total of 687 million barrels to the United States, which has previously pointed to Canada as a secure source of friendly oil.

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John Morrissy; The Ottawa Citizen
September 21, 2011

OTTAWA — Canada is losing ground as a major player in North American natural-gas production, the Conference Board of Canada said in a report Tuesday.

The report forecasts that production is expected to ratchet down over the next five years, led by declines in Alberta output, which is expected to slide by 20%.

As a result, industry profits, which totalled more than $8-billion in 2005, will ring in at $744-million in 2011 and not return to pre-recession levels until beyond the medium term, said economist Todd Crawford.

Drilling activity is expected to be weak for a third consecutive year as explorers shift from natural gas plays to oil plays, where more favourable pricing persists.
And in the near term, natural gas prices will remain depressed — not rising above US$6 per thousand cubic feet before 2015 — as U.S. onshore production increases again this year and demand growth is constrained by the struggling American economy.

As a result, Canada’s place as a global natural gas giant continues to be challenged, as rising output in B.C. and offshore Nova Scotia fails to offset Alberta’s declines, Crawford said.

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Encana, the second largest natural gas producer in North America, indicated this week that it may reduce its 2012 capital program due to persistently low natural gas prices. This is despite the company having roughly half of its targeted average natural gas volumes hedged from now through the end of 2012 at prices averaging more than $5.75/mcf.

Is this a sign that North American natural gas producers are finally responding to sustained low natural gas prices? We think it’s still a bit premature to tell, however, the answer may be just around the corner. Natural gas prices typically bottom in the spring and fall months according to a recent seasonal study conducted by the Signal Financial Group.

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Ontario Energy Association
September 7, 2011

The 2011 Ontario electoral race has begun. Each of Ontario’s four major political parties
have announced their proposed energy platform. The Ontario Energy Association composed a neutral account of each party’s platform.

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Natural gas prices have a history of moving higher from August to December. But what are prospects this year?

Thackray’s 2011 Investor’s Guide notes that U.S. natural gas prices have recorded exceptional seasonal strength from Aug. 1st to Dec. 21st during the past 15 periods. The trade was profitable in 12 of the past 15 periods. Average return per period was 42.3 per cent. The sweet spot is from the end of August to the end of October. A word of caution, though. Natural gas prices are volatile. Returns during the past 12 profitable periods were substantial, but losses during the three losing periods also were substantial.

Seasonality by the sector is influenced by one minor and one major annual weather event that occurs each fall. The minor event is warm weather that increases demand for natural gas used to produce power for air conditioning. The major event is hurricanes entering the Gulf of Mexico that frequently curtail supply. The Gulf of Mexico is the largest gas producing area in the U.S.

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The Energy Collective
August 17th, 2011

The Colorado School of Mines estimates that the total potential of U.S. gas supply increased by 71 percent from 2000 to 2010.

And they are not alone; CERA, MIT and others believe that the U.S. is flush with natural gas.

The process of getting to this shale gas is raising some environmental concerns. We believe, as many experts do, that additional environmental regulations will increase the price of extracting shale gas but will not destroy its cost.

Though it has not yet affected the US, the price of natural gas in Western Europe has already increased by about 15% – 30% in the aftermath of Fukushima. Shutting down German and Japanese nuclear plants has not increased the world’s output from wind or solar systems; it has increased the demand for natural gas. At current prices, natural gas in the UK costs more than 3 times as much as it does in the US or Canada, making suppliers consider the idea of shipping gas via LNG tankers. If that happens, the price differential will narrow considerably. I do not expect the narrowing to come from lower prices in Europe.

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The Toronto Star
August 12, 2011

In a stern communiqué from Brussels, the EU complained to the World Trade Organization that the province gives subsidies to renewable energy producers to force the use of Ontario-made goods.

“This is in clear breach of the WTO rules that prohibit linking subsidies to the use of domestic products,” it said in its statement Thursday.

“The European Union leads the world in the promotion and development of renewable energies, and welcomes the commitment of Ontario to encourage their use,” the EU continued.

“However, the promotion of renewable energies must be done in a manner consistent with international trade rules. The EU believes that the Ontario Green Energy and Economy Act … is inconsistent with Canada’s WTO obligations. Under the WTO, it is illegal to condition access to a subsidy to the use of domestic products.”

In June, Japan launched a similar complaint to the WTO about Premier Dalton McGuinty’s signature green energy program.

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