January 9, 2023 3:51pm
The high cost of energy is expected to continue in 2023, but there is hope later on in the year. That’s according to the Energy, Oil, and Gas Price Forecast released Monday by Deloitte.
Canada’s national leader of energy and chemicals at Deloitte, Andrew Botterill, told CKNX News Today that elevated prices for oil, gas, and energy are expected to continue in 2023.
Botterill said the two-year COVID-19 pandemic saw a reduced demand for oil and gas, which then spiked as economies opened up. Then, the Ukraine conflict cut into European energy supplies.
“It’s certainly not going to be the elevated prices that we saw when the Ukraine crisis broke out, but we still have a shortage of volumes. China’s going to open up their economy and they’re going to be looking to get their economy back up and running, so we expect to see relatively robust prices on both oil and natural gas for 2023,” said Botterill.
Botterill expects natural gas prices to be elevated at least through the first half of the year.
“Probably about where they are now on oil. Natural gas is a little soft in the last week or so, given that we’ve had a little warmer weather, but there’s still a lot of winter to come. So we do expect natural gas prices to increase , especially through the winter,” he explained.
He pointed out the high costs coupled with inflation will see some Canadians struggle to pay for heat and gasoline.
“So in the coming year, with high energy prices that we’re expecting, it could be really tough. It’s going to be interesting to see if governments will be trying to support some of those, especially those with a lower income within our economies, to help support them through these higher energy costs,” he continued.
Botterill pointed out that oil and gas companies under invested in the last few years due to low demand during the pandemic, but now need to drill more and bring on more production.
“We need to create the environment with some clear policy that helps support investment, and gets companies back out spending money to drill,” he said.
Botterill expects to start to see energy prices ease by the end of 2023.
“Will we be able to manage some of those needs early on, I think will be interesting. But then of course as we ago through the rest of 2023, we should see things soften. And then the supply chain should start to be a little more regular and stable, and hopefully see some lower prices in the back half of 2023,” he concluded.
In 2021, the price of oil jumped 3.4 per cent year-over-year, while 2022 saw a 6.7 per cent increase.