Harsh Winter Exposes Volatility in Energy Prices

With the kind of winter that we had and more and more coal firing plants being converted to gas, energy prices have nowhere to go but higher.

Yahoo ran the following story today:

ENERGY PRICES RISING IN BOTH THE SHORT AND LONG TERM:

POWER: Approximately 60% of middle market energy executives  believe electricity prices will rise over the next 18 months. Nearly  three out of four executives (72%) see
higher power prices through 2019. Full article in Yahoo Finance

energy prices

This winter has provided a stark reminder to those who manage energy. It’s now clear that natural gas and electricity prices remain volatile.

The early start to winter and prolonged bitter cold have depleted natural gas storage inventories concerning traders and affecting the market as much as 5-10% in a single day.

This winter may be harsh, but your energy bills don’t have to be. Don’t get caught as one those companies who passed on good opportunities hoping for even lower rates.

To put this into perspective, let’s take a look at the recently expired February 2014 NYMEX natural gas futures contract.   In November 2013 the contract traded as low as $3.46/Dth. On its last day of trading, January 29, it had risen 65% to a high of $5.72/Dth and ultimately expired at $5.557/Dth.  That was the highest expiration price for a NYMEX natural gas contract in 50 months.

commercial gas prices

 

For the past two years, companies have been cautioned that a day of reckoning would be coming as the nation continues to retire coal fired generation and put increased demand on natural gas usage.   The increase in shale gas production from fracking has been a great mitigating factor in limiting the price run up this year.

End-users who purchased natural gas on a monthly variable basis have enjoyed low stable prices for a few years now, but in the past several months, natural gas bills doubled from last year and tripled from the lows set in 2012.

Moreover, the pain has not been confined to natural gas consumers.  With so much electricity coming from gas-fired power plants, electricity prices have soared as well.  Customers who could have locked-in fixed rates months ago near 5 cents/kWh are now reportedly paying variable rates of 10-20 cents/kWh depending on their region of the country.

All businesses and non-profit organizations in deregulated states can lock-in rates before thay go even higher. A qualified energy consultant can do all the work necessary to save money in the future and possibly cut your current energy prices.

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About Larry

After three decades in corporate America, I decided that I wanted to work for myself. Exploring many alternatives led to the opportunity presented from energy deregulation. Being my own boss has many advantages which I enjoy. Building a residual income stream in addition to present income from giving away a free service to businesses that saves them money; I can only say that I wish I discovered this sooner.
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