Canada today decided to increase prices on natural gas exported to the United States by almost 25 percent, in a move that will cost U.S. consumers at least $600 million in additonal charges over the next 12 months.
The Canadian National Enery Board raised the prices effective Aug. 1 by adopting a new formula to bring natural gas prices in line with other Canadian energy supplies - chiefly crude oil - exported to the United States.
Canada's gas exports to the United States are currently worth about $2.3 billion annually on the 1 trillion cubic feet sold to consumers on the West Coast, Midwest and New England States.
Western Canadian gas, now worth about $2.30 per thousand cubic feet at the international boundary, will go to $2.80 on Aug. 1. The next scheduled price increase will take the border price to about $3.50 by the spring of 1980.
Canada's energy board adopted the new pricing formula following public criticism that the fuel was exported for less than its "fair" and reasonable" value.
The federal and provincial governments and producers all share the wellhead revenues.
Alberta officials responsible for the Canada's gas reserves, production and export sales have calculated the province alone lost about $250 million in the first half of this year because of the board's previous pricing practices.
According to provincial computations, Canadian gas now should be priced "close to $4" per thousand cubic feet based on prvailing world prices. That suggested priced may be reached by end of 1980.
The board is in session here to receive further applications for gas exports to the United States.
If the current high ratio of finding gas is maintained, new supplies in excess of the 4 trillion cubic feet now being processed might be available to the United States over the next decade. All the gas will be "opportunity priced" - the industry euphemism for whatever the market will bear.
The transaction, including the current long-term gas exports and the extra fuel offered under short-term arrangements, will be worth about $50 billion, depending on actual prices, during the 1980s. according to oil industry estimates.
Compared to the annual U.S. production of around 22 trillion cubic feet, Canadian gas sales are relatively small. However, Canadian gas is important strategically because it often serves regions that have little or no alternative energy supplies.
It is vital part of the overall energy supply in some hard-pressed Rocky Mountain states, Montana in particular, and in California, where it is the preferred fuel in power generation for environmental reasons.