The energy crisis is getting worse. How safe is Canada?
As gasoline prices rise to $2 a liter and diesel hovers near $2.50, there is little respite for Canadian drivers as the global energy crisis rages on and the Iran war appears to have no end in sight.
The conflict is disrupting transit through the Strait of Hormuz, cutting off about 20 percent of the world’s oil and natural gas supplies from international buyers.
Countries around the world are feeling the tension. Governments have ordered employees to work from home, reduced work weeks and closed universities to save fuel.
The Philippines is in a state of national energy emergency as local fuel prices have doubled and oil reserves have depleted.
In Canada, the pain at the pumps and the expected increase in inflation are a financial challenge for many as the cost of living continues to rise.
But overall, the country is not as affected by the effects of the energy crisis as many other countries.
Given the abundance of energy production, Canada has some protection from the worst effects of the crisis. This is why it is performing better than many other countries, especially those that are struggling with high prices and shortages.
“With everything that’s happening around the world, there’s no doubt that we’re not likely to run out of oil,” said Warren Mabee, director of the Energy and Environmental Policy Institute at Queen’s University in Kingston, Ontario.
There is no shortage of fuel, but the prices of petrol and diesel are increasing. Queens University Professor Warren Mabee says that till now there has been no increase in the prices of natural gas in Canada.
deepening crisis
Dozens of countries have introduced policies this month to address electricity rationing, fuel conservation and fertilizer hoarding. For example, in Myanmar vehicles can only be driven on alternate days, and in Sri Lanka there is a fuel limit of 15 liters per week for drivers. In two Australian states, public transport is now free, a measure aimed at encouraging people not to drive.
Asian countries have been hit hardest by the energy crisis, and their citizens are being asked to make a number of sacrifices amid the shortage.
In Thailand, the government has urged people to take off their jackets to reduce the amount of energy used by air conditioning units, while sports fans in Pakistan will have to watch cricket games at home to save fuel.
Some countries, including China and South Korea, are suspending some foreign sales of fertilizer and cutting fuel exports.
Prices are rising, but there is no shortage
In Canada, the impact is largely at the pumps.
Since the Iran War Started, Oil Prices Have Risen Nearly 50 Percent, and Here’s Why Cost Of fuel.
The average price of regular gasoline this week is $1.89 per liter, up 30 percent from last month. Diesel is averaging $2.32, up 38 percent from last month.
Furnace oil has increased by nearly 30 percent since the conflict began in the Middle East.
Experts have warned that rising fuel prices could fuel inflation and even lead to a global economic recession.
Canada is the fourth largest producer of oil, and most of the crude oil is exported. As a major oil producer with a substantial number of refineries, it has faced no shortage of fuel.
However, oil is a global commodity, and so costs at the pumps are rising.
“The problem, as everyone is realizing, is that having enough oil doesn’t mean prices will stay low. Our price is the global price or close to it,” Mabee said.
“This is having a major impact on all Canadians. And yes, we will have enough oil, but it will be expensive.”
Canada is the fifth-largest producer of natural gas, but prices within the country have not yet risen because gas does not move as freely as oil. There is only one natural gas export facility, although some gas is also exported by pipeline to the US.
Over the past month, natural gas prices have also remained relatively stable in Canada and the US, while prices in Europe have almost doubled.
“We’re safer than this,” Mabee said. “The prices are set in advance. We build stocks during the summer and use them in the winter. It’s a slow-moving market, and there are not so many connection points.”
abundant supply
Other countries that depend on fuel imports are the envy of countries like Canada that have more than enough oil and gas, not to mention other sources of energy like solar, wind, hydro and nuclear.
At a global energy summit in Texas last week, an executive from Cairn, India’s largest private oil and gas producer, was looking for companies that could help boost India’s oil production volume, which produces only 10 percent of its crude.
Anil Agarwal had a “$5 billion shopping list” to find engineering, drilling and other service companies.
It is important for countries to produce at least half of the oil supply they need, he said.
“India will have to work in this direction,” Aggarwal said in an interview. “If they don’t have at least 50 percent, they are vulnerable to energy security.”
Currently, in Canada, the pumps are not running out of fuel in sufficient quantities, even as the cost continues to rise. And with no end in sight to the war, the energy crisis will deepen around the world and here in Canada.
