A familiar refrain at this time of year – listings are down.  Very normal considering most folks don’t want to be bothered with showings over the holiday season.  The difference this year is that they are down more than the last few years and,  there are more buyers out there than usual as folks continue to move to Alberta for all those great paying energy sector jobs.  It’s quite possible that those looking to sell after Christmas might be best served by jumping right into the market rather than waiting until spring when there will be more competition. 

Excerpts from the ATB Economic Comment by Todd Hirsch and Will Van’t Weld

Steady housing market – There were continued signs Alberta’s housing market is in relatively good shape. Nationally, urban housing starts dipped slightly in November to a seasonally adjusted 174,000, which is a pretty significant drop from the 200,000-unit pace Canada has been building at for much of 2012. Alberta, on the other hand, recorded the second highest housing start figure of the year at 35,500.

New housing price index data were also released this week. Since 2011, the national year-over-year monthly growth rate has been a steady 2.27 per cent, but this hides some important variation between provinces. In Ontario, the rate averaged 3.89 per cent; Alberta’s growth rate averaged just 0.73 per cent; and in B.C. it averaged -0.6 per cent.

Recently, Alberta’s rate of growth has quickened, rising by 1.62 per cent in October over 2011, but in Ontario and B.C. the rate has remained relatively constant.

Sticker shock? Not so much for new homes – Fresh paint, new appliances, shiny bathrooms— there’s plenty of appeal to owning a brand new home. And consistent with the currently balanced real estate market in Alberta, the price tags on these newly built abodes remain steady.

In October, the price index on a new home in Alberta stood at 94.2—up only modestly from 94.1 in September. The index is based on new home prices in 2007. Setting that price to an index of 100, the price of new homes in Alberta fell by about 10 per cent during 2008, and has been almost unchanged since then. Calgary’s new home price index in October (98.0) is higher than Edmonton’s (90.8), but both cities remain below the price level five years ago.

Compared to our neighbouring provinces, the new home market in Alberta is still lagging. In British Columbia, the price index of 98.8 is slightly higher than Alberta’s—but it has been trending gradually downward since early 2010.

Saskatchewan is a completely different story. New home prices did wobble during the economic downturn, but have been rising steadily since then. In October 2012, the index in that province stood at 134.0—suggesting prices today are higher by more than a third compared to 2007.

Prices in Saskatchewan have risen more quickly than in Alberta, but the index does not compare the absolute price tag across provinces. Saskatchewan’s home prices are still only catching up to the much higher values in Alberta and British Columbia.

Red Deer home sales in November almost kept pace with October sales while the number of active listings fell to their lowest level in more than 2 years.  Year to date sales in Red Deer are up 11.4% in 2012 compared to 2011 while MLS sales in central Alberta are up 12.1%.

The most active market in Red Deer last month was between $300,000 – $400,000 while listings in that range have consistently fallen over the past few months.  The sales to listing ratio in that price range is 43%, representing a strong seller’s market.

The trend to fewer active listings and strong sales has been prevalent across central Alberta this fall.  More than 40,000 people have moved to Alberta so far this year.  Many of those people are not in a position to purchase a home.  Some have an unsold home where they came from.  Some can’t buy until they establish credit or job security.  Those folks are renters and they are putting pressure on the rental market.  The vacancy rate is less than 1% and rents are rising, pushing renters into buying their first homes.

Recent tightening of mortgage financing rules seems to have had a calming effect on the Toronto and Vancouver markets, but not so in central Alberta where that tight rental market is making home ownership attractive and where higher incomes make it possible to buy in spite of tougher mortgage rules.

So what’s in store for the central Alberta real estate market?  Predictions are very dangerous, especially now with all the turmoil in the world and even the most respected economists can’t agree on what the future holds.

The United States are headed toward the “fiscal cliff” and if the two political parties can’t come to an agreement by the end of the year, the country could end up back in recession.  In spite of their problems, the US has shown signs of recovery this year.  Growth has been slow, but the housing market is showing signs of life again and some economic indicators are more positive.  95% of Alberta’s exports go to the US, so their wellbeing is tied directly to ours.

Of course, there are still problems in Europe and the middle-east and the red hot economies of China and south-east Asia have slowed, raising the prospect of a world-wide recession.  It seems there is doom and gloom everywhere.  There is also much debate about the world oil situation.  Some predict that the US will be self-sufficient and not need our oil.  Obviously there are difficulties getting our oil to other markets due to a lack of pipelines and the difficulty in getting new ones approved.  We are currently selling our oil at a substantial discount to world prices and the existing pipelines are full.

But, there is optimism too.  Many experts believe that the shale oil reserves touted to make the US self-sufficient will not produce the huge volumes predicted and the cost of extracting that oil is too high in actual and environmental costs.  They also believe the Keystone pipeline will be approved early in 2013 and construction will start shortly after.  We will find a way to get our oil to market, whether it is via the west coast or through existing natural gas pipelines to the east coast.  The price of natural gas has been creeping back to more normal levels and there are actually some gas wells being drilled again in Alberta this winter.

Obviously, our well-being relies on a strong energy sector, but there are other industries that are doing well contributing to our economy in Alberta.  Farmers have had a very good year.  Grain prices are high and crops were good.  Our forestry industry is also experiencing a good year with demand for our lumber up due to improved construction starts in Canada and the US.

The Alberta economy has been the strongest in Canada this year and will continue that way for the near future.  Canada is still a model for the rest of the world when it comes to fiscal management and our banking industry is universally admired.  There is no doubt that we are in the best place in the world and the future here is very bright relative to anywhere else.  That means that people will continue to move to Alberta which drives demand for new construction, new infrastructure and economic growth.  Life in Alberta is good!

The Red Deer market continues to forge ahead with November sales keeping pace with September and October.  In the meantime, the active listing count is still dropping, making it tougher for buyers to find that perfect home.  If the trend to fewer active listings and strong sales continues, prices will start to adjust.

There is lots of optimism that two new pipelines to take oil to eastern Canada and the US are imminent, natural gas prices are rising and it looks like the future is bright for Alberta.

Small is Beautiful – Todd Hirsch, Senior Economist, ATB Financial – Small- and medium-sized businesses (SMEs) are the heart and soul of many communities throughout the country. In fact, nearly 95 per cent of companies in Canada are considered small or medium in size. Given that, it’s a good thing that their business optimism is turning higher.

According to a survey conducted monthly by the Canadian Federation of Independent Business, the index of confidence among SMEs in Alberta rose to 72.2—more than a full point higher than the reading of 71.1 in September. On balance, Alberta businesses are more optimistic than the Canadian average, but the national figure did rise by a larger amount in October (from 62.0 to 65.6). Businesses in Newfoundland and Labrador continue to be the most optimistic, followed by Alberta and Saskatchewan.

Measured on a scale of 0 to 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance. According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential.

The high level of optimism in Alberta is attributable to relative stability in the oil and gas sector, as well as the other supporting industries throughout the province such as agriculture and forestry. A significant number of SMEs in Alberta are in the construction and energy sectors, and with those performing well at the moment, it is little wonder that independent entrepreneurs are seeing good days ahead.

Alberta’s housing starts hanging in, Todd Hirsch, Senior Economist, ATB Financial – Despite the anxieties in Europe, uncertainty in the U.S., and a faltering economy in other parts of Canada, Alberta remains remarkably stable. The province’s balanced housing market has been one of the most convincing indicators of that.

Construction got started on 33,127 new homes in Alberta last month (adjusted for seasonality). That is essentially unchanged from September. Over the first ten months of 2012, total housing starts are higher by 33 per cent over the same ten months of last year—a significant increase given the slowing of the housing market elsewhere in the country.

Nationally, housing starts slipped to 204,107 units, down from 223,995 in September—lower than the consensus forecast of 213,000. However, Alberta’s housing market has held up better than most other provinces. The number of starts in October is only slightly below the 10-year average for the province (34,800). And if you omit 2006 and 2007 from the calculation—the two record-setting years for housing starts—last month’s figure is actually higher than average (31,300).  A strong labour market, high average wages, and surging consumer sentiment have helped keep Alberta’s housing market on its feet. But almost most importantly, the province is once again a strong attractor of inter-provincial migrants—many of them moving to Alberta to find work. On a net basis, over 20,200 people from other provinces have moved to Wild Rose Country over the first half of 2012. That alone provides some strong incentive for home builders to keep swinging their hammers.

This is the time of year when the market goes into a slower “winter” mode.  In spite of the sudden wintery weather, October sales were strong, keeping pace with September and up from last October.  In the meantime, the number of active listings has fallen to its lowest level in years.  Strong sales combined with a shrinking supply means the market is now in balance – where neither buyer or seller has an advantage.  A balanced market is ideal, offering buyers an ample supply of homes to satisfy their needs, and sellers an opportunity to find a buyer willing to pay a fair price.  A balanced market means prices should keep pace with inflation only.

We have been conditioned to believe that strong house price inflation is a good thing, but the only winners when that happens are the banks.  Let’s face it, house prices in any market will rise and fall in unison.  It’s a mistake to think that if my house goes up 10% in value, I can sell it and move up with the profit.  Actually, the house I will buy has also gone up 10%, and I will have to finance the difference.  Here’s a tip:  Buy bank shares.

Comparing Canada with pre-housing meltdown U.S. shows all ‘we have to fear is fear itself’ Tara Perkins – Globe & Mail – Oct 31/12

Two well-known economists suggest the angst about Canadian consumer debt is overdone.  And, one says in a new report, Canadians need not fear a U.S.style real estate meltdown.

The comments by deputy chief economist Benjamin Tal of Canadian Imperial Bank of Commerce and chief economist David Rosenberg of Gluskin Sheff + Associates come amid repeated warnings for the Bank of Canada that consumers must get a handle on their record debt burden as the country heads toward an inevitable increase in interest rates.

The central bank went so far last week as to warn that it could raise rates if they don’t, though that appears unlikely at this point.  The key debt-to-income measure has been particularly worrisome, in that it has now surpassed the level at which the United States hurtled into the real estate crash.

But, Mr. Tal said Tuesday, less attention should be paid to the level, and more to the speed at which it has been rising. Several countries have had higher ratios with a meltdown, he suggested, adding that in the last three years that measure has climbed at half the speed than that of the precrash era in the United States, making it appear less threatening.

He also stressed that the quality of mortgages in Canada, as determined in large part by the credit scores of borrowers, is much better.   One-third of U.S. mortgages taken out in the U.S. in 2005 and 2006 were in negative equity positions before house prices dropped, and at least half of the mortgages had less than 5 per cent equity, making them extremely vulnerable to even a small drop in prices. In Canada, only 15 to 20 per cent of new mortgages have less than 15 per cent equity, and the negative equity position is nil, he said.

In addition, Canadian borrowers have begun reducing their exposure to rising interest rates by choosing fixed-rate mortgages over variable. The opposite occurred in the U.S., where adjustable rate mortgages remained popular until the bitter end.

Mr. Rosenberg also talked down the issue, having heard “all of the horror stories” of late. Among his points: Disposable income in Canada is “distorted” against that in the U.S. because Canadians pay for health care from taxes, household debt relative to assets is below peak levels, Canadians have more equity in their houses, wage growth in Canada is double that of the U.S., and debt-servicing abilities are “hardly being impaired.”

Mr. Tal does believe house prices in Canada will probably fall over the next two years, but there are factors to lessen the blow, leading to a soft landing. That’s what policy makers are hoping for.  Those factors include a lower degree of speculation in the Canadian market, and higher quality mortgages…..

Red Deer sales were up slightly over August’s while our active listing inventory slipped slightly.  The ratio between Supply and Demand for homes in Red Deer is just under the 30% mark which means we are close to being in balance – where neither the Seller or Buyer has an advantage.

The overall central Alberta market has improved over August’s.  The market has recovered from a slower August that we suspected may have been caused by changes to the mortgage rules.  The stronger September market may have been caused by tenants turned first time buyers escaping rising rents and a shortage of rental accommodations. The number of active listings is generally lower than last year, bringing the sales to listing ratio closer to balance, but still in Buyer’s market territory in most markets.

That means that prices will remain stable for the near future and won’t increase until that ratio gets well above 25%.  The possibility that could happen in the next few months seems very real, based on the Alberta population growth information below.  The stabilizing factor is new housing.  As people move to Alberta, new houses are built and as long as the construction industry can keep up, housing supply and demand will remain in balance.

Excerpts from Alberta Treasury Branch – Weekly Economic Bulletin – Sept 28/2012

Alberta bound – Statistics Canada came out with population estimates this week for the period of June 2011 to 2012, showing
that Canada’s population hit 34.9 million people. This was mostly thanks to immigration, at 260,000 people. For the past decade, Canada has been accepting between 240,000 and 270,000 immigrants annually, a rate that is the main reason the population is increasing. The natural rate of population growth (births minus deaths) has been in the range of 130,000 to 140,000 over the same period.

Alberta’s population continues to not only grow the fastest in the nation, increasing 2.5 per cent (the national average was 1.1 per cent), but also remains the youngest, with a median age of 36.1 years (the national average age is 40). As well, interprovincial migration picked up over the period, with 28,000 Canadians relocating to Alberta. International migration also picked up substantially, hitting a record 34,500 individuals.

And Alberta inbound – Given that Ontario is by far the largest province in Canada by population, it’s not surprising that it also
provides the bulk of Alberta’s inter-provincial migrants. Last year 10,700 Ontarians got on the Trans-Canada highway and headed west. In contrast, net-migration from Saskatchewan, historically a major source of labour in Alberta, was very low, at 454 individuals.

Contrary to popular belief, neither Atlantic Canada nor Saskatchewan has contributed the most to Alberta’s net gain in population. Over the past decade Alberta’s net balance of population with Ontario increased 91,000, which is more than the number of the combined increase from Atlantic Canada and Saskatchewan (at 52,500 and 24,600, respectively).

Regardless of an individual’s place of origin, the human pipeline to Alberta represents good news for the local real estate markets, as these new Albertans need to be housed, and for the provincial labour market, as it keeps things from overheating too quickly.

A recent news article suggested that home sales this summer have been impacted by the changes to mortgage rules, specifically lowering the maximum amortization from 30 years to 25.  The article quoted the Finance Minister as saying he was no longer concerned about a housing bubble. Sales of starter homes in Red Deer were certainly slower in August and we  suspected that the mortgage changes had impacted our market.  But, it seems there is another pressure out there that may have an even stronger impact.  Starter sales to date in September seem to have recovered likely because of the strong population growth discussed below which has created a heated rental market and the inflating rents that go with that.

The rental market is always the first to feel the pressure from population growth.  Many people moving to Alberta have left unsold homes behind, or won’t buy a home until they are sure they want to stay, or can’t buy a home until they’ve been in their jobs for a while.

Tenants who have been here and renting for a while and experience the rent increases are the ones to react.  As soon as rents equal or exceed mortgage payments, they become motivated to look at home ownership.

Our lives, our homes – Will Van’t Veld, ATB Economics

In the river of information on the residential housing market that flows by every day, there comes, once every five years, the big houseboat of data that makes for interesting watching.

It’s Canada’s Census.

Statistics Canada releases the census results in stages, and on Wednesday came data on families, households and marital status. Nationally, the number of private households increased by 7.1 per cent between the census periods, 2006-2011. And, yes, Alberta’s growth rate of 10.7 per cent was the fastest in the nation, corresponding to an annual average of 30,000 new households. That’s almost 16 per cent of the 189,000 new households added nationally.

Every new household needs a home and back in February, the agency released data on the size of the private housing stock. From that, we know that the housing stock increased on
average by 34,000 units in Alberta and by 199,000 nationally.

Clearly, construction between the latest periods was more than adequate to accommodate demographic demand, with the difference indicating that more families have second homes (there’s also likely more vacant homes out there). Housing is cyclical and some of the current strength likely compensates for under building in the previous decade, but clearly the cycle has been on the upswing for quite a while now.

Another interesting revelation from the data was how the structure of families is changing. There was a jump in growth of households of couples without children (up 12.8 per cent in Alberta) and people living alone (up 11 per cent), explaining the surge in preference for condos.

Red Deer sales in August were down almost 18% from July.  Sales in the starter market (up to $300,000) were down 33% which is likely the result of tightened mortgage qualifying rules imposed earlier this year.  The rental market is showing signs of strain with very low vacancy rates and rapidly increasing rents.  That pressure is likely to translate into more started activity going into the fall.

On the other hand, sales at the higher end of the price spectrum ($400,000 +) have been much stronger this summer than last.  Buyers for those homes are probably less impacted by the mortgage rule changes and are finding good value for their money.

Generally, the market is much slower this summer than it was in the spring with sales to listing ratios trending back to buyer advantage territory.  More building starts this year have helped keep demand from overwhelming supply as in-migration into Alberta from other provinces continues to be strong.

Excerpts from Aug. 31/12 ATB Financial Weekly Economic Bulletin by Todd Hirsch & Will Van’t Veld

Canadian GDP chugs higher – One of the most reliable and closely watched indicators of economic activity is the quarterly national accounts, which measures the gross domestic product. On this final day of August, we learn that the Canadian economy keeps chugging along—slowly but surely.

The total value of all goods and services produced in the Canadian economy grew by 1.8 per cent in the second quarter of 2012 (adjusted for inflation), according to the latest release from Statistics Canada. That slightly exceeded the 1.6 per cent expansion predicted by a consensus of economists.

Speaking to the media this morning, Canada’s Finance Minister Jim Flaherty said: “We have now witnessed four straight quarters of economic growth. While the growth is modest, it reinforces Canada’s positive economic track relative to other countries. Indeed, Canada continues to have the strongest economic growth of all of the G7 industrialized countries.”

There is no quarterly breakdown available for the provinces, but Alberta’s energy sector may have been one of the contributors to the country’s overall growth. Statistics Canada reports that “oil and gas extraction increased 1.0% in the second quarter, as an increase in crude petroleum production was partly offset by a decrease in natural gas extraction.”   The relatively good news for the economy lifted the Canadian dollar this morning, which was up almost half a cent against the U.S. dollar.

However, the growth will not be strong enough to convince the Bank of Canada to raise interest rates. With very little inflation pressure building, and only modest growth, there will be no appetite building at the Bank to hit the button on rate increases until well into 2013.

U.S. economic update – Economic growth in the United States came in slightly better than expected in the second quarter, at 1.7 per cent. This was down from 2 per cent in the first quarter. Most GDP components were slightly slower in the second quarter, which was expected, but net exports came in more positive and government spending decelerated less than it did in the first quarter.

U.S. housing continues to be a good news story, with the influential Case-Shiller Home Price Index increasing 1.2 per cent on a year-over-year basis in June, the first time the indicator has turned positive since the 2010 home-tax buyer credit. The Case-Shiller index measures the change in home prices that have been sold at least twice.  In other news economic news, U.S. personal consumption expenditures and disposable income for July came in fairly strong, increasing 0.4 and 0.3 per cent, respectively. This was the fastest consumption
expenditures increased in five months. On a less optimistic note, new jobless claims benefits have remained relatively flat, indicating that employment has yet to pick up significantly enough to reduce the unemployment rate.

Market Update – Month to date sales in Red Deer in August have slowed considerably compared to the same period last year and it’s unlikely we will reach the levels achieved in July. Some of that is probably due to the very nice summer weather we’ve been experiencing. As you can see from the articles below, the job situation in Alberta is very
healthy which should translate into a healthy housing market.

Our other central Alberta markets are experiencing much the same conditions with the exception of Sylvan Lake whichmay be benefitting from the nice weather and the resulting heavy lake traffic.

Oil prices have been gaining ground recently with prices hovering around $90 per barrel. While that doesn’t translate into good news at the pumps, it certainly is good news for energy
sector employees in central Alberta. We expect a good fall for the central Alberta housing market – an adequate supply and strong demand which equates to a balanced market, but very little increase in prices.

Excerpts from ATB Financial Daily
Economic Comment by Todd Hirsch, Senior Economist

Aug. 13, 2012 Full and Part Time Work – Last week Statistics Canada released the latest Labour Force Survey, which showed Alberta gained about 5,800 jobs in July. But not all jobs are the same—economists like to see gains in full-time positions as assign of a healthy economy. On that front, Alberta is doing just fine.

In July 2012, there were just under 1.8 million people working in full-time jobs in the province while there were only 351thousand working part-time. Compared to the previous month, full-time jobs were up by about 15,300, whereas there were actually 9,600 fewer part-time jobs.

Aug 14, 2012 – How Good Do We Have It? Most job seekers in this province know firsthand that times are good and finding work is generally not too difficult.
But Albertans may be surprised to hear that compared to many other places in the developed world— things are more than good—they’re great!

The Organization for Economic Cooperation and Development (OECD) tracks and reports the unemployment rate among the advanced, wealthy countries of the world. Given all of the economic uncertainty in many parts of the globe at the moment, these rates vary wildly.

Currently the highest unemployment rates among the OECD countries are found in Europe, with Spain taking top (bottom)honours at 24.6 per cent unemployment— basically, one in every four Spaniards is without work. Greece comes in second with an unemployment rate of 21.9 per cent, followed by Portugal at 15.2 per cent. Overall, the European Union is
grappling with unemployment of 10.3 per cent.

At the other end of the spectrum is Norway. Its oil fuelled economy means that only 3.0 per cent in that country are out of work.

The Asian OECD countries of South Korea and Japan also enjoy extremely low rates (although Japan’s overall economy is not performing that well).

If it was counted separately as an OECD country, Alberta would find itself in very good company. With an unemployment rate of4.5 per cent in May, it would rank as the fourth best place in the industrialized world in which to be looking for work.

The number of residential sales in Red Deer in July were just slightly higher than July 2011.  The good news is that year to date sales are up 15.5% thanks to a strong spring market.  The number of active listings compared to last year is down from 675 to 521 which has been a major factor in bringing the market into balance.

The sales to active listings ratio for July 2012 was 31%.  That means 3 buyers for every 10 homes on the market which CMHC considers balanced – where neither buyers or sellers have an advantage.   When we are experiencing a balanced market, prices should remain stable, rising to match inflation only.

The article below suggests that more people are moving to Alberta than ever and if that’s the case, the buyer advantage will diminish as more folks compete for those available homes.

Accommodating the Alberta bound – Will Van’t Veld , Economist, ATB Financial

There’s a reason why Calgary’s CTrain has been feeling more congested lately: people have been flocking to Alberta. Not since the boom years have so many people arrived in our province—and if the pace keeps up it will have important implications for the local economy.

That people are coming to Alberta shouldn’t be a surprise.  In fact, it’s slightly more surprising that it took until the first quarter of 2012 to see the numbers really spike. The unemployment rate is not only well below the national average, but wages have been steadily climbing. In fact, the average weekly wage in Alberta is now $156 higher than in Ontario.

While migrants from other provinces have recently shown more interest in our province, the upward trend in international migration has been occurring since the recession hit. Alberta gained about six thousand migrants due to international migration in the first quarter, almost double what the province was recording just five years ago.

The tremendous influx of people during the boom years caused a severe shortage of housing and other social services. So far, Alberta’s infrastructure and housing stock appears more prepared to accommodate the growing population. There’s a good reason for this, as housing starts, for instance, might have dipped during the past couple years, they didn’t fall off of a cliff either. Major infrastructure projects also continued to go ahead.

With companies actively recruiting out of province workers, both nationally and internationally, and the prosperity gap still heavily in Alberta’s favour, there’s a good chance more people will be Alberta bound in the coming quarters. At a certain point it may strain our ability to accommodate them, but so far so good.

Month to date July sales in Sylvan Lake just about the same as the same period in July in 2011 and also the same as the first two weeks in June, while Red Deer sales have slowed compared to last month and last year.

It’s hard to understand why local markets can be so different, but it is possible that the smaller centres are finally catching up a little with Red Deer.

The world economic situation seems to have stabilized slightly in the past few weeks and the price of oil has held just above $80.  That is good news for central Alberta and as long as those indicators remain stable, we expect our real estate markets to be stable as well.  The Red Deer and Blackfalds markets still favour sellers and the Lacombe, Sylvan Lake and Ponoka markets favour buyers.

Excerpts from ATB Financial Weekly Economic Bulletin – July 13, 2012

Mixed housing market signals – Regulatory changes geared at cooling the housing market came into effect this week—but data on how much the market was already cooling in recent months, is providing mixed signals.

Last week sales data showed a precipitous drop in June, while this week construction data came in relatively strong, with strong housing starts and new home price data.

Year-over-year the new home price index rose 2.4 per cent in May. This was driven mostly by Toronto, where prices rose 5.5 per cent (in Alberta new home prices were flat).

Housing starts data for June was also surprisingly strong coming in at a seasonally adjusted annual rate of 222,700 units—that’s about 5 thousand more than May’s number.

Total starts in Alberta were 31,100 in June, steady from starts in May.  Starts in our province’s two major cities made significant jumps, with Calgary numbers 65 per cent higher than in 2011 and 46 per cent higher in Edmonton.

2011 Natural Gas – Anyone who follows the natural gas market would probably like to forget 2011. For that matter, the first half of 2012 as well. The folks at the Energy Information Administration (EIA) aren’t in the business of forgetting however, publishing a year-end review for natural gas in 2011 this week.

The EIA charts a disastrous year for 2011 in which average prices dropped to $3.98/MMbtu from 2010’s $4.37/MMbtu.  This was due to record high production and storage levels, which pushed the price even lower through 2012.  Why did production keep rising despite rock bottom prices? The EIA attributes this not only to the cheap abundance of shale gas, but the desire of drillers to drill for crude and other projects that produced natural gas as a by-product.