Where are natural gas prices heading?

I just did a quick check on CME’s site to see where natural gas price is trading at the Henry Hub.  As of April 18, 2022, at 11:15 AM, natural gas was trading at approximately $7.784/MMBtu or MCF.   Last month, I locked in a contract for my home at $4.99/MCF for the next 24 months and am feeling good that I have some protection for the next two years.

But do I? Do I have the protection I think I secured?

Recently, a natural gas provider declared bankruptcy and sent its customers in Ohio back to the utility.  It led me to wonder if others will follow.  Many suppliers to large aggregations and industrial-sized contracts are locked into sub five cent per kilowatt-hour contracts until 2025.   Most of these suppliers hedge their pricing so that up or down, the suppliers can guarantee pricing for the term.  But those who engaged in the hedge are at risk and it feels like dominos are ready to start falling.

It’s hard to believe electric prices can continue to go higher, but they can and they will until there is some longer-term policy change to recommend natural gas supply until we are ready for an alternative. You can always give us a call if you need advice on your electric price!

Be careful out there!

Lori

Image Credit: Charl Folscher