Is it time to lock in a natural gas rate?
It’s easy to forget about high natural gas bills from last winter. But as this winter comes closer, it’s time to think about the natural gas you’ll use and the price you’ll pay for it.
The basics of natural gas
Natural gas is found in many places around the world and can also be found below large bodies of water, like the Gulf of Mexico or the Pacific Ocean. In the U.S., natural gas is taken out of the ground in 32 different states and distributed by pipelines across the country. It’s used in homes and to fuel businesses, but an increasing amount is being used to generate electricity in power plants. The same natural gas you use to heat your home in the winter is actually being used all year long, affecting how it is priced throughout the year.
How natural gas is priced
The pricing of natural gas is highly dependent on its demand. This is one of the main reasons why your bills can be at their highest during the winter months. This past winter, however, the West Coast was hit by a weather phenomenon known as El Niño and the result was unseasonably high temperatures across the country for the winter months. Understandably, since the East Coast experienced these milder temperatures, the usage of natural gas to heat their homes and businesses was low. Low usage drove the demand for natural gas down allowing many consumers to have lower bills. Those low rates continued into the summer months, as demand for natural gas remained low. Six years ago, the price per MCF (million cubic feet of gas) was at $12, now it’s hovering around $3. In fact, natural gas pricing recently hit the lowest it’s been in the last 17 years. But as the typical winter heating season draws near, it’s possible there could be a new forecast on the horizon.
Should I lock in my natural gas rate?
As a consumer, you can take advantage of the current low pricing by locking in your rate for either a short term (12 months) or long term (3 or 5 years). Imagine not having to worry about the gas market pricing while your family stays nice and warm for the winter. With a longer term fixed rate, you can avoid any potential price fluctuations for the next three or five winters! By locking in now, you can capture the current low rates, and sit back and enjoy the fall weather—after all, winter will be here before you know it.