Natural Gas and Electricity Prices are Still Low

NYMEX Natural Gas Futures Odd Years

While prices for natural gas and electricity are higher than they were last year, they are still exceedingly low by historic standards.  If you look carefully at the above graph, the tan colored line represents 2013.  You can see how long the 12-month price is.  This represents what the commodity cost of gas will be for a 12-month fixed price contract, before adding the cost of getting the has through the pipeline to its destination.  Locking in a fixed contract now will protect you from potential increases in price.  Since electricity prices depend, in great part, on natural gas prices, this information is very relevant.

 

NYMEX Prompt Month Gas

The above graph displays the different commodity prices for the prompt month (September, 2013) and fixed price gas contracts (Strips) of varying lengths.  Here you can see that the expected direction of the market is upward.  So while a 24-month fixed price contract will cost more than a short 6-month contract, you are paying for the elimination of upward price risk.  If you only have a 6-month contract, you have the very real risk of a much higher price when that contract expires.

While there are no perfect crystal balls, this kind of market analysis is just one reason why businesses use Better Cost Control to help control their energy costs.

To learn more about controlling your electricity and natural gas prices, contact Better Cost Control or one of our independent sales agents today.