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Natural gas prices - Lock into a fixed rate or not?
My contract is up and the lowest 5 yr rate is 33.8 cents. Currently my local gas supplier is at a rate of 27 cents. (which changes every 3 months) Not sure if I should lock in at 33.8 cents or not. Does anyone know what the future prices might be? I read that prices will increase 6% per year. Please advise on what you would do and what I should do. Thanks
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Even the gas and propane companies can't accurately predict the futures market. That's why people actually buy and sell futures on the market. The trend is definitely going up. Propane is close to $2 per gallon, up from $1 four years ago. If your current supplier is willing to lock at 27 you should jump on it. Most of them will only give you a year to year lock with an "adjustment" at the end of each year.
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It's a year later and I have the same question... the energy markets are much different than a year ago. A company called IGS keeps sending me offers to lock in my natural gas rate. I have always declined because after keeping track for 2 years, I've noticed that my variable Central Hudson prices have always been lower. Now, IGN is offering 99 cents per ccf through June 2010. It seems like a good deal, especially since my Central Hudson rate has never gone below $1.06/ccf in the last 2 years. But I keep asking myself... if IGN has dropped, and to date Central Hudson usually beats them... it seems reasonable that the current market will drive down Central Hudson's price too. The last time I was sent a lock-in promotion, the lock-in price from IGN was $1.58/ccf and my Central Hudson bill was $1.16/ccf. The new lock-in is 99 cents/ccf and my last Central Hudson bill was$1.34/ccf. What do you guys think? |
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