Energy Market Update
One of the most common questions we field at APPI Energy, particularly during times of heightened market volatility, is: “Is now a good time to buy”? Our team relies on an analysis of past and current energy market conditions, with a focus on what is driving the market higher and lower, to help make well-informed energy buying decisions.
What’s Happening in the Energy Markets?
For example, take a look at Figure 1 from the U.S Energy Information’s Short Term Energy Outlook, which shows past and projected natural gas spot prices. Take note that both the EIA and the market project a slow but steady increase in the price of natural gas through the end of 2024. While many may still choose to wait in hopes pricing continues to dip lower, it’s also important to note that the potential risk of higher prices far outweighs the potential benefits of prices moving lower.
Figure 2 illustrates natural gas prices for delivery in 2024–2030. Note all terms beyond 2024 are 10%-21% higher than they were at this time in 2022, a year with the highest price volatility we have seen in over 20 years. Natural gas and electricity prices are highly correlated so a similar trend can be expected for electricity prices.
What Does That Mean?
Well, energy is unique in that you can purchase it at today’s prices, but not take delivery until some point in the future. While supplier prices have dipped in recent months from the highs of last year, and while we do not know exactly where prices will be in the future, we do know that volatility tends to increase as the start date gets closer, due primarily to weather. The best path forward is to begin exploring all your options.
In addition to providing a true apples-to-apples comparison of pricing across our network of carefully vetted suppliers, APPI Energy also advises clients on the term lengths, and multiple procurement options available, to help them buy during these inevitable dips in the market. As the energy landscape continues to shift, we are advising our clients to consider all aspects of their energy profile and goals, aligning those with their budgetary needs to secure a strategy that is aligned to their organization’s risk tolerance.
Bottom line: The EIA and the market project a slow but steady increase in natural gas prices through 2024. Now is a good time to consider your options carefully by taking advantage of a free assessment with our team.
As part of an AFS membership benefit, APPI Energy is available to analyze your energy usage, evaluate your energy bill, deliver a green-apples-to-green-apples comparison of supplier prices and contracts, and negotiate a supply solution for you.
Additionally, APPI Energy offers powerful and holistic energy management solutions to reduce demand, reduce costs, and increase sustainability. As a true extension of your team, APPI Energy provides tailored solutions that help you set and meet your energy goals while reducing overall energy costs.
To learn more and take advantage of this AFS Corporate Membership benefit, connect with us by calling 800-520-6685, or reaching out at firstname.lastname@example.org.