Why Are 2024 Natural Gas Prices So Low?

A common question i've gotten from our sales team this year is "why are are Natural Gas prices so low?". Lower natural gas prices are here, and they're expected to remain low for much of the year. Understanding why they are low and helping our customers make smart decision is what THE TEAM does best.

After a few years of higher prices, the natural gas industry in Western Canada is experiencing a shift back to more affordable rates. Currently, natural gas is selling for about $2.09 per million British thermal units (mmBTUs), a significant drop from over $7.50 in 2022. This decrease is largely due to high production levels and record storage in Western Canada, combined with a milder winter that has reduced the demand for heating.

Martin King - Senior Analyst with RBN Energy based in Calgary

For natural gas producers, this drop means tighter profit margins. "They're kind of gritting their teeth, wringing their hands, and hoping for the best," says Martin King, a senior analyst with RBN Energy based in Calgary. However, there's a glimmer of hope on the horizon with the expected completion of the LNG Canada export terminal in British Columbia. This project could potentially shift market balances and improve prices, although it's still an untested idea.

The situation is similar in the United States, where prices are low due to warm weather and high production levels. Additionally, a closure at an LNG export facility in Texas is reducing the amount of natural gas available for international markets, keeping prices down.

Despite the challenges for producers, consumers are reaping the benefits. Natural gas prices in Canada are down about 25% compared to a year ago. This decrease not only helps lower our utility bills but also supports various industries, like manufacturing, that rely on natural gas.

In Alberta, the provincial government faces a drop in resource revenue due to lower oil and natural gas prices. This could impact their ability to balance the budget in the coming months.

With all these changes, now is the perfect time to consider your energy choices. Right now everyone is using less natural gas due to the mild weather. A part of an energy customers bill is how much they pay for the energy they use. It's found under the "Energy Usage Charges" on the bill. It is calculated with a simple formula:

(Energy used) x (Energy Rate) = Energy Charges

If the average home uses 1 GJ of natural gas in the summer it really doesn't matter what the rate is because it won't have much of an effect on what they pay. In situations like this the Administration fee can be more expensive than the Energy Charges.

By choosing Xoom Energy, you can enjoy one of the lowest administration fees in Alberta. When our team does a price quote for potential customers we look at all the line items to find out if we can meet or beat what their current price. Reach out to our experienced energy consultants and have a conversation, we take pride in helping customers make the best choice for their situation. Have a great Summer!

THE TEAM

Alberta's Most Experienced Energy Retailers