It's a Small World, When it Comes to Natural Gas
- by
Alison Bracegirdle
Louisiana natives won’t be the only people affected by the devastation of hurricane Katrina. Home and condo owners here in oil-rich Calgary, Alberta will feel the sting of a North American natural gas shortage that will drive up prices never seen before in the history of natural gas sales.
“The magnitude of the damage she (hurricane Katrina) did is quite phenomenal,” said Mike Holtz, energy advisor with Utility Source Inc., which provides advice to condo boards about energy and brokers the best price out of utility providers for the board. “To be honest, North American supply and demand is a tight balance, we have just enough to meet demand.”
Some of the production facilities for natural gas were based in the Gulf of Mexico and were destroyed, creating a two per cent shortage, said Holtz. Natural gas prices are calculated by estimating at the beginning of the month how much it will cost. As you can imagine, no one could have predicted hurricane Katrina, but due to the shortage it has caused, prices in the last 60 months of trading did not go any lower than $7.270 per gigajoule, and now predictions estimate hitting $13.000 per gigajoule by Christmas, said Holtz.
Amanda Brinker, a complaints analyst for the government of Alberta’s Energy Utilities Board says, without fail, as prices rise, so do the number of inquiries and general complaints. She was helpful in explaining what many of us learn in Grade 7 social studies from economist Adam Smith’s invisible hand theory.
“Often scarcity starts with shortage of supply, with hurricane Katrina or tensions in the Middle East,” said Brinker. “The laws of supply and demand apply, if supply goes down, demand goes up, with the price.”
Alberta may produce a substantial amount of natural gas in house, but much of it is sold to North American and international markets, leaving us to buy it at a rate minutely less than our buyers. Shortage fears this year in particular are hard to predict, but speculations are out there.
"This year there is a little bit of a utility scare," said Crystal Deley, chairperson for the Association of Condo Managers of Alberta. "For example, instead of a three to four per cent hike, let's say there could be an eight or nine per cent increase."
Condo owners need to be conscious of the fact that the repercussions for irresponsible energy wasting are paid for by all the residents, an unfair burden to bear for the prudent conservationists.
So how can condo owners save on the energy bill?
"They shouldn't have the windows open all year, the heat cranked, because if the windows are open, they're throwing dollars out the window," said Deley, adding 35 per cent of the condo corporation's budget typically goes to utilities. "Managers can inform residents of these tips through the newsletter."
Deley also recommends condo boards get a device which would only cost about $2,000, but will save residents unneeded energy expenses. An indoor outdoor control can sense both the indoor and outdoor temperatures and it waits until the mercury drops to 10 degrees Celsius to fire, and the pumps will not activate until they drop to zero.
Another sign of a healthy condo board, which will not be knocked off their high horse this fall with rising utility prices, is simple, long-term budgeting strategies.
"People need to be aware of the corporate finances to make sure that they do have positive cash flow," said Laurietta Kaechelle, senior property manager and vice president of Calgary and Area for Emerald Property Management. "You want your cash flow to be the way that you run things, have a look at the budget and be prepared for it. Kaechelle says it also wouldn't hurt to have an energy audit done on the building to see if anything can be improved.
For more helpful hints about buying and owning a condominium in Calgary, watch Shaw TV's Condo Living with Barb Mitchell each Wednesday, Saturday and Sunday.
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