On October 30, 2008, the Commodities Business Unit of the National Energy Board (NEB) released its winter energy outlook. At that time, the report seemed rather pessimistic: oil prices had fallen to $75 per barrel, natural gas was trading at around $6.50/MMbtu, the global economic outlook was worsening and the NEB was predicting volatility in the energy markets.

Please click here to view graph.

In retrospect, the report was conservatively upbeat compared to where we find ourselves today: oil at $44 per barrel, natural gas at $5.70/MMbtu, and the TSX in the 8000's. In fact, the NEB was predicting crude prices to average in the range of US$50 to US$75 per barrel over the winter; a price that would have current investors jumping for joy.

In October the NEB Board Chair, Gaétan Caron, declared Canada was well positioned to weather the storm much better than other economies because of its relative abundance of energy resources. Whether or not this holds to be true only time will tell. In the short run, however, there is little doubt Canadian energy companies are more stable than most others and there is even growth, albeit from an unexpected source.

Wind power technology has expanded rapidly in the past few years, a trend that is expected to continue. At the end of 2007, total installed capacity of wind generation was 1,650 MW, and the Canadian Wind Energy Association (CanWEA) estimates the current total of installed capacity across Canada stands at 1,876 MW.

Other sources of energy are also factoring into our energy mix. While Canada is unlikely to see any new nuclear power plants for a while (given the long development times required) we are decidedly not going to decommission any of them. Instead, Canada has embarked on large scale refurbishment. In New Brunswick, NB Power is currently refurbishing the Point Lepreau nuclear reactor which is due to be completed in 2009. Hydro-Québec will invest $1.9 billion to refurbish the Gentilly-2 nuclear generating station in Bécancour and, in Ontario, Bruce A units 1 and 2 are currently being refurbished and are scheduled for completion in 2010 at which point units 3 and 4 are scheduled to undergo their refurbishment with completion expected in 2013.

With all of the uncertainty in the markets, it is comforting to know the NEB has predicted there should be no supply interruptions this winter because of lack of electricity supply. If nothing else, at least Canadians can stay warm this winter and watch the ups and downs of their favourite hockey team, instead of their investments.