Amid all the doom and gloom, Canadians could be in for a very nice winter.
And while the National Energy Board’s projections are bullish, they also have a caveat.
And that is the economy’s capacity to handle the extra heat.
So what can we expect in 2018?
We can expect a big drop in energy prices.
Canada’s energy industry is expected to fall by more than 10 per cent in 2018, and the fall will come even faster for natural gas and hydroelectric power.
In addition, energy-intensive industries will face higher costs for new pipelines, new transmission lines and the like, which will add to the cost of building new hydroelectric plants.
That will hit the most vulnerable sectors like mining, manufacturing and construction, says David Macdonald, a former energy minister and chief economist at CIBC World Markets.
“You’re going to see some companies that are in some tough spots.
That’s why you’ve got the [energy] sector and you’ve also got the transportation sector,” he says.
As for natural-gas prices, it could drop by 20 to 30 per cent.
“The energy sector is going to have to go through a tough patch because they’ve got to find a way to deal with the price volatility,” says Macdonald.
“It’s going to be a tough ride.”
But for the most part, Macdonald expects the drop in prices to be modest, and most of the impact will be offset by lower gas prices.
“They’ll be in the $2 to $3 per million Btu range.
You’re going for that right now,” he adds.
So the outlook for the economy is generally optimistic.
But if the forecast is wrong, the effects could be devastating for the country.
“I don’t think anybody is expecting the worst, but if you’re in the middle of a drought, it’s not very comforting,” Macdonald says.
The weather isn’t exactly sunny, and it’s cold.
But Canada’s winter is not a typical summer.
It’s usually warm and sunny, but in 2018 it’s usually not hot enough to stay warm in the winter.
As a result, there are plenty of days when temperatures are above freezing, and those days tend to bring more rain than average.
The country also sees a lot of thunderstorms, which means it’s possible for more lightning to hit the country each year.
“People have been talking about a drought of the decades,” MacDonald says.
“But I don’t see that as a true drought of centuries.”
If it was a true drought, it would mean that there’s a lot more water to go around.
And it’s just a matter of when that water is going and how much.
In fact, if we look at the last three winters, the last five winters have been the coldest winters on record.
And the recent dip in temperatures is mostly due to the fact that Canada has had a lot less precipitation than usual this year.
But there are signs that the country may be able to bounce back.
“In my view, the outlook is pretty good,” MacDonnell says.
He says that even if the economy can’t pick up much more speed, Canada should be able catch up to the rest of the world.
“If we are going to do well in the coming years, I think we should be really confident that we’re going through a transition period that is going very well for Canada,” he said.
“We’re doing very well right now.
The question is, when is it going to get better?”
With files from The Canadian Press