Experts Predict Canadians to Face “A Very Expensive Time” in 2023 Due to High Oil Prices

In a new analysis, Deloitte predicts that the price of a barrel of Edmonton City Gate crude oil in Canada will be $101.35.

This analysis, published on January 9, predicts that the price of West Texas Intermediate crude oil, a significant part of the North American Market, would reach US$80 per barrel in 2023.

“We’re going to see elevated prices across the country. It’s a very expensive time,” said Andrew Botterill, Canada’s national leader of energy and chemicals at Deloitte.

“We expect to see relatively high oil prices through the year. And, to be honest, natural gas is also a really similar story,” said Botterill. “Unfortunately, as consumers, it’s probably going to be expensive to heat our houses and fill our tanks.”

It is predicted that prices will rise across the country, however Botterill claims that residents of areas like Alberta and Saskatchewan may see slightly cheaper pricing due to the close proximity of many production facilities.

Botterill says that rising international demand for North American oil and natural gas will drive up prices, which will be good news for Canada’s energy producers.

His prediction was that the oil price gap between Canada and the United States would continue to increase into 2023.

Botterill predicts that high costs will continue due to a combination of factors, including the ongoing situation in Ukraine.

“(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 stated.

The Deloitte report claims that the pricing uncertainty has been aggravated by the US$60 per barrel price cap on seaborne Russian crude established by European countries along with the G7 and Australia.

According to the report, the price cap is also targeted toward China, India, and Turkey, which are projected to become Russia’s three biggest crude oil buyers.

In response to countries who have accepted the cap, Russia, the world’s second-largest oil exporter, has said that it will not supply to those countries.

Despite the fact that companies would usually use the windfall from higher energy prices last year to increase budgets and invest in larger projects, Botterill predicts that in 2023 companies will be more focused on shoring up balance sheets and preparing themselves for continued uncertainty due to ongoing geopolitical tensions and talk of recession.

According to Botterill, this means that businesses may spend more time on pilot programs and policy making this year than on making massive, long-term investments.

“We’re going to see (producers) making really laser-focused investments on piloting and understanding technologies and understanding the risk and then getting a little bit more policy understanding and security.”