High oven oil and propane prices could leave some Canadians struggling this winter – National
It is not just gasoline and natural gas. The global energy crisis is also driving up the price of oil and propane from furnaces, a harbinger of higher utility bills for many villagers and millions of Canadians living in smaller rural communities.
The average retail price of furnace oil in Canada reached $ 1.33 per liter in early October, compared with 86 cents a liter and $ 1.14 a liter during the same period in 2020 and 2019, respectively, according to data. from Canada’s natural resources.
Natural gas price increases will fuel inflation and hit low-income Canadians more
It’s a similar story for propane, says energy analyst Rory Johnston, founder of the Commodity Context Newsletter.
Propane inventories in the US are the lowest in a decade, he says. Propane prices, barring a brief spike in 2014, are the highest they have been in the same time period, and Canadian prices closely reflect that trend, he adds.
Record gasoline prices are expected to remain high through the winter
Consumers across the country face the likelihood of higher utility costs this winter amid escalating prices for natural gas, the main source of heating energy for more than half of Canadian homes. But the impact of prices can be even more severe for almost 1.4 million households They depend on heating oil or other fuels, including propane, to keep warm.
Canadians who live in smaller cities and rural areas and don’t have access to cheap electricity or natural gas already tend to have higher heating costs, says Theresa McClenaghan. Executive Director of the Canadian Environmental Law Association.
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On top of that, they are often excluded from provincial and territorial government programs that provide energy cost subsidies or financial incentives for home modernization that reduce household energy consumption, he adds.
The situation could become especially dire for many of Canada’s nearly three million energy-poor households, who spend more than six percent of their annual pre-tax income to keep their lights on and heat their homes, McClenaghan warns.
“Without conservation measures and with rising prices, the chances that these families will exceed what we define as the energy poverty threshold increase,” he says.
“At that point, it is discovered that people have to start making difficult decisions about adequate food, medications and rent or other household expenses,” he adds.
Increases in the price of heating oil and propane linked to global conditions
Prices for heating oil, a petroleum distillate, and propane, a by-product of natural gas processing and petroleum refining, reflect the ripple effects of an energy shortage that threatens global economic recovery.
High prices for both natural gas and gasoline are making oven oil and propane more expensive, Johnston says.
As COVID-19 restrictions are relaxed and economic activity around the world accelerates, global demand for energy has increased rapidly. Yet at the same time, the uncertainties of the pandemic have made producers reluctant to make significant capital investments, contributing to supply shortages.
Natural gas prices in Europe and Asia, which are highly dependent on energy imports, have more than tripled this year, due to low storage stocks, high demand from Asia, and lower-than-usual supplies from Russia, in addition to the low production of renewable energy. sources in some areas, as well as infrastructure outages.
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Even in North America, which has its own supply of natural gas, prices are higher than they have been in more than six years.
The mismatch between supply and demand for natural gas is also driving up the price of petroleum distillates, as some industrial facilities in Europe and Asia switch from prohibitively expensive gas to petroleum derivatives as an energy source, Johnston says.
“Natural gas in Europe is priced (equivalent to) more than $ 200 a barrel right now,” he says. “On a relative basis, it is much cheaper to burn diesel or other distillates, or sometimes even direct fuel, rather than natural gas. And that reverses a trend that we’ve seen basically since the 1970s, when the first round of oil crises pushed the prices of oil products so high that it began to push them out of the electricity mix. “
In Canada and the United States, natural gas is still considerably cheaper than diesel, but additional demand from abroad is putting upward pressure on the price of many petroleum distillates, according to Johnston.
It doesn’t help that US refineries are diverting some production capacity for products like furnace oil to gasoline amid rising demand for the latter, he adds.
“They’ve seen this increase in pandemic road trips where people get into cars and actually drive more than they did before the pandemic,” he says.
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Low-income consumers, indigenous communities most at risk
Low-income households in small towns, rural settings, and indigenous communities that do not have access to affordable electricity or natural gas infrastructure are the most vulnerable to higher prices for propane and furnace oil, McClenaghan says.
This is because energy efficiency and subsidy programs are often tied to regulated suppliers of natural gas and energy, it adds. Consumers who depend on unregulated fuels are often left behind.
A newly created federal program offering grants of up to $ 5,000 for energy-saving upgrades requires homeowners to reserve and prepay for eligible upgrades and file a claim for reimbursement. That doesn’t work for many households struggling to pay their bills, McClenaghan says.
“We found over the years that this is a total barrier for low-income households. They can’t pay for the energy audit first or pay contractors to do the work and then file a claim and wait for reimbursement. “
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