David Olive: It’s going to cost a lot more to heat your home this winter — and it didn’t have to be this way

When you open your January home-heating bill and reach for the smelling salts, don't blame the Alberta natural gas producers who supply Central Canada.

Simply put, there isn't enough natural gas worldwide to match the surge in demand from the unprecedented reboot of the global economy, and to keep our homes warm this winter.

No, we are not running out of natural gas.

World prices for natural gas are rising to near-record levels in large part due to a preventable unfolding of miscalculations.

Those include geopolitical brinkmanship by Vladimir Putin. And the failure of major economies to adequately stockpile natural gas to accommodate surging demand in a post-pandemic economic boom. More on that later.

GTA natural-gas consumers can expect price increases of 16 per cent to 19 per cent this winter.

Painful though that is, it's a modest hike compared with jurisdictions that don't have Canada's gas self-sufficiency. Canada also relies less than others on gas for power generation, with hydro and nuclear a significant part of the electric-power mix.

But U.S. natural-gas prices jumped about 66 per cent last month. That will flow through to Canadians in higher prices for imported U.S. goods.

The same applies to imports from Europe and Asia, where natural gas prices have more than tripled this year.

Given China's outsized role as a goods supplier to Canada, disruptions caused by Chinese natural gas shortages will likely push up the prices of Canadian consumer goods.

China is already shutting down factories and diverting power from industrial uses to residential heating and other nonindustrial uses.

With only a touch of alarmism, some experts in global energy trends are warning that today's sharply rising energy prices worldwide are a taste of similar or worse energy crises we will endure over the next two decades as we transition" to clean energy.

At least this time, conditions in Canada aren't that dire.

Economists and government policy-makers in Canada remain convinced that today's above-average inflation is transitory." That, for instance, the doubling in GTA pump prices in the past year is a short-term hardship, and that prices will ease back to pre-pandemic levels by next summer.

Coming out of the COVID-19 pandemic, pent-up demand has been unleashed, predictably pushing up prices for everything. It will take about two years to work that unusually high demand out of the system.

That said, those mildly alarmist experts are on to something.

It will be no easy thing to match the phaseout of fossil fuels with the ramp-up in clean energy sources in something approaching perfect synchronicity.

Energy is a massive, complex infrastructure of traditional and emerging technologies, government, non-profit and private-sector actors, countries with disparate agendas, and often competing goals of enhanced environmental protections and profit maximization.

Problems will arise, for instance, with each failure to co-ordinate reduced oil-refinery runs with increased energy from wind, solar and other alternative energy sources.

It won't surprise you that there is no global master plan for executing seamlessly on that megaproject of megaprojects.

That would seem an obvious priority for world leaders at the upcoming climate-crisis summit in Glasgow that starts last this month.

It is not, however. The summit will be counted a success if leaders don't back away from the pledges they've made to cut growth in greenhouse-gas emissions.

But if we mismanage future energy crunches the way we've botched this one, future episodes of disruption might indeed lie ahead.

Obviously, we can't afford that.

Energy inflation in Canada, at a staggering 20.7 per cent in August, according to the Organization for Economic Cooperation and Development (OECD), is the second-highest rate in the G7.

The rate for the OECD, the so-called club of rich countries of which Canada is a member, is almost as high, at 18 per cent.

If you strip out energy and food inflation from the consumer price index, Canada's overall inflation rate would fall from its 18-year high of 4.1 per cent to a more livable 2.8 per cent.

Canadian food inflation is probably running at a painful five per cent or so, higher than the StatsCan reports that don't account for certain price inputs.

Food inflation is strongly tied to energy because of the food-supply system's heavy reliance on transportation, whose costs soar with rising energy prices.

The worrisome state of the world natural gas market is cause for concern about incompetence in managing the transition to clean energy.

Making sense of that the alarming dysfunction in today's natural gas market is a job for Franz Kafka.

But let's try.

For starters, Vladimir Putin, the Russian president, is dragging his heels on increasing Russian natural gas exports to a Europe in danger of crippling gas shortages.

By keeping gas at home, Putin is guarding against domestic shortages that could cause civil unrest.

But Putin has also long used natural gas exports as geopolitical leverage in Europe, reminding it of Russia's major-power status. He's doing so now. Every day that passes without Putin increasing supplies to Europe, commodities traders push up world prices of natural gas.

For Bloomberg energy analyst John Authers, this crisis is all about Russia." He points to the slavish attention commodity traders pay to every word the Russian leader says, setting world prices accordingly.

When Putin merely hinted this week that Russia might ease the supply crunch with increased gas production, world prices dipped. But only briefly, since Putin wasn't specific about his next move.

Meanwhile, this might not have been the ideal year for Germany to start decommissioning the last of its nuclear power plants. The world's fourth-largest economy is more dependent than ever on natural gas for power.

Several Asian economies have been hoarding gas. By pulling it off the world market, they have helped diminish supply and raise natural-gas prices.

China, the world's biggest natural gas buyer, is increasing its gas imports, putting upward pressure on the world price.

China needs to ramp up gas-fueled power production to replace the thermal coal it stopped buying from Australia last year. That fit of pique was to punish Canberra for its temerity in calling for a global inquiry into the origins of COVID-19.

And Europe, China, and Brazil, among other major economies, this year quixotically failed to maintain adequate stockpiles of natural gas to fuel anticipated post-pandemic economic recoveries.

Even Canada's natural-gas storage levels are at a five-year low.

That is what the absence of a master plan for co-ordinating a changing world mix of energy sources looks like. Heaven help us.

David Olive is a Toronto-based business columnist for the Star. Follow him on Twitter: @TheGrtRecession