New Jersey natural gas prices usually rise during the winter. But this year’s outlook is more risky than normal. As NJBIA’s exclusive energy supplier, Direct Energy Business has your organization’s best interests in mind. Here are the top four factors that could affect gas prices in the coming months, and what you can do to protect your business.
- Low Storage Levels
Energy consumers use more gas in the winter than the United States can produce. Usually, we make up the difference by putting gas in storage during the summer when consumption is low.
But this winter, storage levels are extremely low – the lowest they have been since 2005. Why? The summer of 2018 was one of the hottest on record, meaning electricity demand was very high. As gas is used to generate power, there was less gas leftover to store for winter.
As a result, we’re already seeing market volatility and higher than usual gas prices. If you’re looking to avoid extra costs and unpredictability, you have an opportunity to lock in a fixed rate now.
- High Market Prices
With low gas storage levels, prices in most markets are trending high this winter. In fact, in many markets today, multi-year contracts are priced lower than shorter contract. This is unusual because future prices customarily value at a higher rate than the current price. If you can lock in a long-term energy contract, now could be a great time to buy.
- Insufficient Infrastructure
The U.S. still lacks sufficient pipeline and storage infrastructure in some key markets. Gas used to meet winter demand and gas used for power generation flow on the same pipelines, which can cause congestion. The potential for supply disruptions is at its highest during winter.
Because of this risk, contracting with a reputable gas supplier is extremely important. Trustworthy suppliers have the connections, resources, and foresight necessary to help you meet the demands of your load without bearing the potential of skyrocketing costs due to pipeline constraints.
- Extreme Weather
In January 2018, a historic “bomb cyclone” hit the Eastern United States, dropping snow and ice from Florida to New England. This period of severe cold brought on some of the biggest demand days for natural gas and severe congestion across Northeastern pipelines. Inventories dropped significantly, and prices skyrocketed tenfold.
Even just the forecast of bad weather can cause volatility. To avoid high energy prices due to a winter storm, businesses can opt to lock in a fixed rate now.
With questions about how to choose the right plan for your business, please contact Stephanie Huhn at 732.570.1474.
