The B.C. government’s new gas royalty scheme has rightly been in the news because of the province’s multibillion-dollar accounting error.
But the debate is missing a more fundamental issue: the government is betting against British Columbians and the industries that rely on domestically produced methane gas.
The revenue projections in the 2026 budget—flawed as they may be—rely on a near-doubling of methane gas prices in the province between the 2025-26 fiscal year and the 2026-27 fiscal year.
There are two major problems with this. First, it does not reflect observed reality: AECO, the main price hub for methane gas in Western Canada, has spent most of 2026 hovering just above the 2025-26 average price given in its budget, far below the $2.18 per gigajoule the province expected.
Prices have failed to rise despite the significant demand created by LNG Canada because producers in the province’s northeast have been able to expand production and keep pace with demand.
Royalty revenues this year will likely vastly underperform the budget estimates not just because of the province’s accounting errors, but also because benchmark gas prices are significantly underperforming expectations.
Industry forecasts expect gas prices to rise in the coming years, bringing us to the province’s second, more significant problem. If methane gas prices double, that might mean more revenue for the province, but it will also mean higher costs for ratepayers and businesses in B.C.
We warned about this scenario in a report I co-authored for the David Suzuki Foundation in 2025. If the liquefied natural gas (LNG) industry causes methane gas prices to rise—as the province is betting it will—that means hundreds of millions of dollars in additional costs for B.C. residents and businesses.
In our report, we estimated these costs using industry price forecasts for 2025 and 2026, finding that an 88 per cent increase in methane gas prices from the 2025 baseline would increase residential gas bills for the average customer in Vancouver by $188.39 annually.
A range of industries active in B.C. also use methane gas, including the beleaguered forestry industry. In the scenario we analyzed, Canfor, a major forestry company, would see its gas costs increase by $14 million a year. Industrial gas users overall would be spending an estimated $222.76 million more than they had the previous year.
With industry groups now promoting building methane gas-fired power plants in B.C., price increases could ripple into electricity rates.
At this point, we don’t know whether methane gas prices will rise in line with industry expectations or whether producers will be able to keep pace with demand, suppressing prices for the foreseeable future. But what is clear is that the B.C. government has put British Columbians in a lose-lose situation.
If prices remain low, we will see greater revenue shortfalls than those already guaranteed by the government’s accounting mistake, which could lead to service cuts and austerity.
On the other hand, if prices rise because of a slew of new LNG facilities, any benefit from royalty payments to the provincial government will be offset by higher costs for households and B.C.’s industrial sector. These higher costs will drag on the economy, impacting consumption and potentially driving non-LNG businesses out of the province, both of which would negatively affect government revenue.
The benefits the B.C. government hopes LNG will bring can come only at the expense of affordability and our non-LNG industrial economy. By positioning itself to rely increasingly on rising methane gas prices, the province is betting against British Columbians. Heads, the foreign shareholders who own most of the industry win; tails, we lose.
Nick Gottlieb is a Vanier scholar and a PhD candidate at Simon Fraser University, focusing on the political economy of the LNG industry.
