Natural gas is a commodity traded on the NYMEX (New York Mercantile Exchange). Like every other commodity, prices on the exchange fluctuate on a daily basis. There are several ways to purchase your natural gas supply and the purchasing methods usually correspond to your consumption volume and appetite for risk. Our goal is to provide you with the necessary information you need to best purchase, procure or hedge your natural gas consumption. We can implement various traditional and non-traditional cost cutting methods to hedge your natural gas supply. We will also make all the necessary arrangements, complete all paperwork, and continuously manage your entire natural gas portfolio.
THE OPEN MARKET
A traditional way to arrange your gas supply is through a utility provide such as Enbridge and Union Gas. These utility companies will charge you for gas supply, the delivery of gas to your burner-tip, in some cases transportation and storage, and finally a monthly customer administrative charge.
Even though gas prices fluctuate daily on the NYMEX, you utility provider will charge you a fixed price for a period of 3 months. Any fluctuation in price on your utility bill will occur quarterly. Below is a chart of the Enbridge and Union Gas historical market price:
A retailer will typically offer a fixed price natural gas contract for a period of 1 to 5 years. If you choose this method then your price will no longer fluctuate quarterly, but will instead remain fixed for the length of the contract term. The fixed prices a retailer charges are usually dependent on the time of the year (prices are typically higher during the winter months), natural gas storage numbers, future supply forecasts, and the futures market.
Unlike the electricity market, the gas market allows you to hedge or contract your delivery and transportation in addition to the actual commodity itself. These contracts are referred to as a Bundled-T contract. You also have the option of a variable gas contract, which is called an AECO 5A contract. Pricing on this type of contract mimic Alberta’s monthly gas index.
As you can see, the natural gas market comes with just as may contract types and terms as the electricity market. We know the products and terms quite well. Once we asses your usage and goals, we will recommend a solution that works for you. Contact us to explore your options and discover which gas solutions will reduce your bottom line.