The market is flooded with the latest technology and energy technology news, but it is still the energy sector that is most susceptible to price shocks and volatility, according to a new report by the Canadian Securities Administrators.
The report, which was released Tuesday, found that the energy industry’s energy companies are still at risk from price shocks, and are facing an even greater challenge than the energy sectors at the national and provincial level.
The companies that are the most vulnerable are: gas producers, oil and gas producers and pipelines companies, wind and solar energy producers and producers of natural gas and hydroelectricity, the report said.
The report does not include energy producers such as wind farms, nuclear reactors or oil sands projects, which are also highly vulnerable to price fluctuations.
The risk is compounded by the fact that these companies are often the ones that are required to spend money on research and development and production to help ensure the industry is operating safely.
The researchers noted that the oil and natural gas sector, which has seen a significant shift to renewable energy, will likely experience the biggest volatility, and may see a “large-scale transition to less cost-effective technologies, especially when gas prices drop and prices for renewable energy are expected to rise in the future.”
The report does note, however, that there are a number of factors that are driving the energy market to the point that the risk of price shocks is growing.
It also notes that the economic recovery from the global financial crisis has helped boost demand for energy in Canada, and the energy and mining sectors are now expected to continue to grow.