Summer’s almost gone and school’s starting. It still feels a bit hot outside to be thinking about flannel shirts and sitting by the fireplace. That means it’s a good time to plan ahead, and consider locking in your natural gas for winter, if you haven’t already.
Managing energy costs for your business is an important decision. And it’s a complex one. We’re all constantly seeing events in the news that could affect natural gas supply and demand one way or another as they unfold. Prognosticators mention weather forecasts, economic trends, geopolitical events, consumer sentiment, and much more. And projections and data have a funny way of drifting into speculation and hype.
With so many factors to consider, it can be tempting to overthink the decision. You can keep it simple and still meet your budgetary goals.
Here are 6 quick questions to ask yourself.
- How low could the market realistically drop this winter? Some fluctuation can always be expected. Any increment could impact your bottom line. But by enough to be meaningful?
- When the market reaches its lowest point, how will I know it? It’s hard to be sure without the benefit of hindsight. The bottom may not even be attainable. And if you’re waiting for that perfect moment, will you be ready to recognize it and act swiftly?
- What is it worth to me to wait for it? Your time is valuable. There’s plenty more to occupy your bandwidth than watching a natural gas ticker bounce up and down by fractions of a cent. The more resources you devote to shopping, the lower the market needs to drop to provide a suitable return on your investment.
- What if it doesn’t go much lower? The market may or may not get to a specific target price in time for winter. The longer you wait, the fewer your options. You could paint yourself into a corner without realizing it and end up missing the low point. What if this is as good as it gets?
- How much higher could the market go? When the market starts creeping away from you, it can present another dilemma—do I cut my losses or hold out for another dip? The result could be spending more time waiting for an ideal price that never materializes, and then paying more anyway.
- How much would I gain if I lock at rock bottom? Maybe you’ll hit the jackpot. If so, how big of an advantage will that give you over your competitors? Meanwhile, are your competitors glued to the screen awaiting the right moment to shave off that last nickel? Or are they focusing on running their business? Taking care of their customers? Marketing to yours?
Avoid the trap.
The value of locking in natural gas extends beyond fixing a low price. It protects against volatility and pricing spikes that can occur in winter for numerous reasons. Budget certainty in one area of your business provides flexibility in other areas, where it may not be as easy or worthwhile to fix costs.
In some ways it’s like insurance. You know you’ll pay something. It may or may not turn out to be the best-case scenario you could have imagined. But it’s a lot better than the worst. There may end up being other times you could have paid slightly less–or more. You won’t know for sure until it’s too late.
What you do know for sure is that a price you fix right now will be the price you pay for natural gas supply for the term you lock in. Whether or not that ends up being your best-case scenario, it’ll certainly be lower than the prices you could be exposed to in a bad-case scenario. The longer you hold out for the ideal price, the higher your risk of paying more in the end, if the ideal never gets here.
Let’s focus on your business.
Ultimately, it’s a matter of how much time you want to spend thinking about natural gas. You need it to run your business—to heat your buildings, operate critical commercial and industrial equipment, or all of the above. When it’s business as usual, wouldn’t you rather focus on all the things natural gas does for you, rather than the price of gas?
We’re constantly monitoring energy markets and so much data and intel out there that affect energy. We’re happy to dig into the data to advise you.
And if you want to keep it simple, rest assured that we’re doing the analysis behind the scenes. We’re here to help you make a sound and strategic business decision that works for your budget. Contact us and let’s get started.
