Whether it was heating your home or filling up your vehicle, Canadians saw gas and oil prices soar to record highs last year. 2023 will not be much different, say experts.
According to a new Deloitte report that forecasts oil and gas prices, Edmonton City Gate, a benchmark crude oil in Canada, is expected to sit at $101.35 per barrel.
West Texas Intermediate, a benchmark crude oil in the North American Market, is forecast at US$80 a barrel for 2023, states the report released Jan. 9.
“We’re going to see elevated prices across the country. It’s a very expensive time,” Andrew Botterill, Canada’s national leader of energy and chemicals at Deloitte, told Global News.
“We expect to see relatively high oil prices through the year. And, to be honest, natural gas is also a really similar story,” Botterill said.
“Unfortunately, as consumers, it’s probably going to be expensive to heat our houses and fill our tanks.”
Although inflated costs are anticipated across the country, residents in provinces like Alberta and Saskatchewan may notice slightly lower prices due to close proximity to a lot of production facilities, according to Botterill.
How COVID, Ukraine war triggered the price hike
The price of oil has been on the rise for a few years. In 2021, oil jumped 3.4 per cent from the year before, according to the Deloitte report. In 2022, there was a 6.7 per cent hike.
According to Botterill, for the better part of two years during the COVID-19 pandemic, the demand for oil and gas sectors reduced.
“That meant that a lot of oil companies didn’t invest and didn’t put money into new drilling opportunities and bringing new production online,” he said.
With COVID restrictions lifted and life returning to a certain degree of normalcy, demand has risen to where it stood before the pandemic, or even higher, Botterill said.
“We’re seeing most of the world out of the COVID pandemic and demand is up,” he added.
Coupled with the Ukraine conflict, which has no end in sight, prices are anticipated to remain steep, according to Botterill.
“(It has) taken a lot of volumes that came out of Russia, both natural gas and oil, and essentially neutralized them or removed them from the market,” he said.
According to the Deloitte report, the imposed US$60 a barrel price cap on seaborne Russian crude by European countries, in co-ordination with the G7 and Australia, has added to price uncertainty.
The price cap also effectively targets nations like China, India and Turkey, which will become the main customers of Russian crude, the report says.
Russia, the world’s second-largest oil exporter, has stated that it will not sell to countries that have accepted the cap.
Werner Antweiler, professor of economics at the University of British Columbia’s Sauder School of Business, expects sanctions against Russia to remain in place through 2023, and infers that supply will be “significantly” impacted.
With countries moving away from Russian oil, Antweiler expects to see an “interesting reshuffling of markets.”
“That reshuffling means that a lot of countries are scrambling to get supplies from suppliers that are considered more secure and reliable,” Antweiler told Global News.
Prices to remain ‘volatile’
“This rerouting going on will probably have an impact on prices,” Antweiler said.
Prices “will be elevated” and remain “volatile,” he added.
“A lot of things are possible on the global political stage, from tensions in Korea to tensions across the Strait of Taiwan,” said Antweiler.
“All of these things are conceivable, but of course, we don’t know if they will happen or not and so what we need to be prepared for is that we are living in a more volatile world. We need to think and anticipate that there will be significant disruption to the supply of energy coming from this uncertainty that we’re living with in the global world.”
According to Botterill, China’s reopening economy after eased COVID restrictions could have “significant” impact on energy needs in 2023.
“As we see China start to open up their economy, will we see another wave of a need to start to move more investment or move volumes in different directions? I think we might,” he said.
“That’s going to create a whole new slew of supply and demand crunches for sure.”
What about natural gas?
As far as natural gas price hikes go, it is a “really similar story,” said Botterill.
In Canada, natural gas production has been steadily growing since late 2020, according to Deloitte’s report.
“But the higher prices in 2022 have not produced the spike in supply that one might have expected,” the report states.
Now, the lack of momentum in gas drilling and associated production reflects the lack of certainty about future prices, it adds.
The “inflationary pressure” on household heating costs is also likely to continue as significant increases in supply don’t look likely.
“With the continued geopolitical uncertainty, the first quarter of 2023 is likely to be just as volatile as the past few quarters but with the added anxiety of a cold winter in full swing,” according to the report.
Impact on diesel
Like other commodities, diesel is also expected to see high prices in 2023.
“The price of diesel is strategic,” said Dan McTeague, president of Canadians for Affordable Energy.
“It is the fuel that is the global workhorse, and it is going to go much higher,” he said.
Speaking on the Roy Green Show on Sunday, McTeague predicted diesel prices this year to mimic 2022.
“We’re going to see a replay,” he said.
“I think we’re looking at $2.75 a litre this summer for diesel.”
A large reason for these expensive prices is due to very strong demands, according to McTeague.
“Post-COVID, economies are going to pick up. We use diesel for everything, from heating to fertilizer, all the way up to jet fuel,” he said.
There’s ‘little’ Canada can do
Jean-Thomas Bernard, economics professor at the University of Ottawa, doesn’t expect oil or gas prices to go much lower in 2023.
“Oil is a commodity that is traded worldwide. It is the most traded commodity,” he told Global News.
With the price of fuel determined on a global scale, Canada has “little control” of just high how prices can get, according to Bernard.
However, the demand for oil is expected to reduce in the future as Canada aims to help tackle climate change and cut back on the use of fossil fuels, Bernard said.
According to Botterill, while many thought Canada may bring on more energy transitions, companies made the decision to “hoard cash, shore up their balance sheets and make sure they’re financially strong,” to prepare for potential volatility.
“We shouldn’t expect companies to go out and dramatically increase budgets. I think they are investing in things like new technologies. They want to move to lower carbon technologies. They want to help with the carbon capture and sequestration,” he said.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
