Natural Gas spikes as electric rates hitÂ 2 yearÂ low
Did the hurricane cause electric rates to go up
The hurricane past by Texas and the gulf of Mexico completely so you would think there wouldn’t be an issue. Since forecasters at Colorado State University went on to say, “the rest of the 2007 AtlanticÂ hurricane season would be busy, with a total of 15 named storms”, we are seeing Natural Gas futures traders in a trading frenzy raising prices back up again. Is this wild speculation? Of course it is. We have no idea if one of these 15 huricanes will knock out a refinery or offshore rig but such is the energy futures market.
As businesses remain on the side lines watching electric rates continue to go down they may want to pay attention to what is happening as rates have spiked up today due to hurricane fears. 160 mile an hour winds are expected to ravage through the coast of Central America. Now why would this cause our Natural Gas prices to go up and with it electric rates? There are no easy explanations to this as it is not just about the hurricane. The complex world of natural gas futures and how they correlate with electric rates is not completely understood by anyone. You could make a good living buying and selling natural gas futures if you knew exactly what might cause natural gas to go up and down at any given moment. You would also need to know when short positions are ready to start covering and when long positions are getting ready to sell. That emotional aspect to the markets keeps things volatile. A storage report showing bad numbers could just as easily cause natural gas to go up as keep the market flat. There are other aspects in the market at work for one variable to be the deciding factor.
Historical energy trends in Texas
Historically Texas has seen a steady increase in Natural Gas prices over the long haul. The generation plants in Texas produce most of their electricity with this fossil fuel. Knowing that prices are at a respectable low in a 2 year time frame and knowing that Natural Gas is in high demand for years to come I would recommend locking in on a commercial energy contract for at least 2 years. Most energy traders and forecasters predict over several years Natural Gas does not have many other possibilities besides going up. If you look at the possibilities 5 years from now you may want to get in for awhile at this low price rather then seeing if rates may keep going lower. Remember, we are not a state made up of cheap energy generation like Nuclear. We rely on coal and natural gas more then we should and we should take advantage of its volatility while these prices remain low.