There are a number of uncontrollable factors that affect the price of natural gas in both the short and long term.

Weather - The most important factor in determining short-term price movement in North America is the weather, and in particular the effect of temperature on the need for winter heating and summer cooling. Prices tend to follow a seasonal cycle with higher prices in the winter and summer and lower prices in the spring and fall. El Nino and Hurricanes have also shown a significant impact on natural gas prices.

Cost of Alternative Energy Sources - Crude oil and natural gas prices tend to be inter-related, where natural gas prices typically track the fluctuations of the crude oil market. Recently, crude oil prices have experienced historical highs due to strong global demand and on-going disruptive circumstances in oil-producing countries. This has caused uncertainty in the marketplace regarding the dependability of the commodity supply. During these price fluctuations, many large energy consumers practice fuel switching, which is a temporary change from one fuel to another to reduce gas price increases. This activity increases the demand of natural gas, thus increasing its price.

Foreign exchange - The Canadian price of natural gas is derived from the US NYMEX price and converted into Canadian dollars. A weakening Canadian dollar will increase Canadian gas prices. A strengthening US dollar (compared to CAD) or a weakening Canadian dollar (compared to USD) typically means that Canadians will spend more money on energy. Take the following scenario for example: assuming the price of natural gas is $8 USD/MMBtu and the US dollar strengthens from $0.84 USD/CAD to $0.83 USD/CAD, the Canadian price of natural gas would go from $9.03 CAD/GJ (8/(0.84 x 1.055056)) to $9.14 CAD/GJ (8/ (0.83 x 1.055056))* . That’s an increase of approximately $0.11 CAD due to a penny increase in the US currency.

Note: 1.055056 GJ’s is equal to 1 MMBtu