Gas prices rose on Wednesday to a record $2.60 per million British thermal units, the highest price in four years.
A drop of more than a cent is also expected.
“It’s a really interesting time for Canada’s natural gas producers,” said John Lippman, executive director of the Natural Gas Action Centre.
“They’ve got an incredible amount of capacity, and if the price of gas goes up, the capacity gets squeezed out.”
On Wednesday, the Canadian Association of Petroleum Producers reported a decline of 0.9 per cent in the average price of natural gas at its Toronto headquarters, compared with a rise of 4.1 per cent on a year ago.
That represents a gain of $9.2 billion in the past three months.
But the overall price of Canadian natural gas has slipped since June.
Prices have dropped as much as 10 per cent from the peak reached in March, when prices were above $US4 a million British Thermal Units.
The average price for natural gas in Canada was $US7.65 a million Btu in February, up from $US5.55 in January, according to the Canadian Energy Research Institute.
The increase in price is expected to persist, especially with supply shortfalls in the United States and Europe, said Jim McQuaid, chief executive officer of the Canadian Federation of Independent Business.
The CERAWeek forecast has natural gas prices in the $US2.80-3.50 a million price range, according the Canadian Natural Gas Association.
Natural gas companies have been scrambling to keep up with the price swings and to stay competitive.
Canadian Natural, which operates a natural gas processing facility in Fort McMurray, Alta., said it expects to pay more than $US100 million ($124 million) in the next year.
That’s more than double the $30 million that it paid last year, said Brad Wallack, president of Canadian Natural.
The company said it plans to cut about 30 per cent of its workforce by next year to stay in business.
“Our pipeline and equipment costs will be a big part of that,” said Wallack.
“And we’re going to need to increase our spending on other areas to continue to grow.”
With files from The Associated Press