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article imageConference Board of Canada confident natural gas prices to rise

By Stephanie Dearing     Mar 22, 2010 in Business
Natural gas prices are at a four-month low, and expected to stay low throughout 2010. In spite of this, profits for the sector are expected to double, according to a study released by the Conference Board of Canada.
Ottawa, ON - There's a glut of natural gas on the market, which has been keeping prices down. But the Conference Board of Canada anticipates that continuing economic recovery will push up demand, with price increases also predicted for 2010. The biggest factor in the predictions is the U.S. market, where Canada exports most of it's natural gas. The report, released Monday, does not jive with American forecasts. American energy experts don't see prices for natural gas recovering in 2010. The V.P. of Energy at MF Global, Michael Fitzpatrick, told Bloomberg Business Week “The economy is constrained and the idea of a recovery remains questionable.”
An economist with the Conference Board, Todd Crawford, said "Although prices have nearly doubled in less than six months, drilling activity remains sluggish as Canada continues to ride out the remaining effects of the recession." The Conference Board predicted "... pre-tax profits in Canada's gas extraction industry are forecast to bounce back near 2008 levels, reaching close to $5.9 billion in 2010."
The prediction has caused consternation for other sector experts, who fear the glut of natural gas will serve to keep prices depressed through 2010. AJM Petroleum Consultants Vice-President Ralph Glass told the Winnipeg Free Press "My real fear is there is no real market for the gas. Any excess volumes are just going to force the price down."
The Conference Board also predicted that employment in Canada's natural gas industry would climb slightly this year, with no further job losses expected for the sector in 2011. Unconventional gas extraction is seen as a major stimulus for the sector in 2012 and beyond.
The Conference Board of Canada describes itself as "The foremost, independent, not-for-profit applied research organization in Canada; Objective and non-partisan. We do not lobby for specific interests."
Canada is the world's 3rd largest producer of natural gas.
More about Conference board canada, Natural gas, Economic recovery, Todd crawford, Economist
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