Natural Gas Prices Remain at a Ten Year Low

Natural Gas Prices Remain at a Ten Year Low

Photo by Tod Baker

If you are a regular reader of this blog, this post is the same song, new verse.

Natural gas, the primary fuel used in the production of commercial electricity in Texas, is currently selling at the lowest prices we’ve seen since the state deregulated power ten years ago. During that ten years, the price of natural gas has been well over twice what it is today for most of the time. At its peak, it hit prices as high as 6 times as high as it is now.

You don’t have to be terribly market savvy to understand the impact this can and does have on commercial electricity rates. If it costs generators less money to create power, it will typically cost consumers less money to buy it. When natural gas prices dip (as they have in recent months), the effect on commercial electricity rates is favorable—the price drops.

As Bloomberg reported just yesterday, “U.S. utilities…are burning a record amount of natural gas for generating electricity without triggering a forecasted boost to the fuel’s price from near 10-year lows.” That’s the good news, but there is more to this story than that. The same article from Bloomberg went on to point out, “Cheap gas, rather than helping power producers…, undercuts their revenue because it drives down wholesale electricity prices,” which is why the Public Utility Commission (PUC) in Texas is currently considering raising the Power Balance Penalty Cap and System High Cap to $4500 as soon as August of this year, with additional increases scheduled that could push the cap as high as $9000 by 2015. In Texas, we need energy production to be attractive to generators so that they will build more generation. We’re a growing state, and our consumption is growing, too. Without more generation, our needs will eventually outpace our supply.

While there are other factors influencing the cost of commercial electricity, it is still well worth pointing out that the natural gas market is low. Commercial electricity rates appear to have bottomed out for the time being, due largely to the cost of natural gas, making this a prime time to lock in a low energy rate for your business. Because rates seem to be on their way back up, waiting to make your move could end up costing you in the long run. Why not consider taking advantage of the favorable market conditions now?

At Live Energy, we specialize in assisting businesses like yours capitalize on our market knowledge to secure the lowest possible commercial electricity rate. We thrive on saving our clients money. We’re ready and willing to put our expertise to work for you. The Texas energy market is volatile—let us guide you through the variety of commercial electricity choice you have, helping you to select the product and term that will fit your business best.

If you’d like to learn more about how the powerhouse team here at Live Energy can help you trim your commercial electricity costs, give us a call at (817) 810-7770.


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