Realgy does not speculate on price changes

Posted on: February 21st, 2014 by rgadmin

The CNBC article “Natural Gas could rise to $8: Energy expert” is an interview with a natural gas trader. One noteworthy facet of traders’ work is that they speculate on the changing cost of natural gas so as to profit from a price increase or decrease.

This is EXACTLY opposite from what Realgy does.

Realgy tries to buy natural gas so as to deliver the lowest price to our customers. The greatest variable in doing this is the changing volume of natural gas used by our customers.

Consumption or demand for natural gas; this is an instance where the trader and the energy marketer are both dependent on the weather (along with storage). Weather is the greatest driver in how much natural gas will be used; storage allows for a buffer in allowing the gas in storage to be readily available for use.

In the CNBC article, the discussion about the weather affecting consumption (withdrawals from storage equate to higher demand) is accurate. However, the coldest winter in 20 years would create disruption in any market place. So gas prices should rise when demand soars; the law of supply and demand dictates they do.

So the question is, by how much? Should they rise 27% in a day, followed by 15%, etc.? The answer is…probably not. This is when traders’ speculation drives pricing for which ALL users pay.

Realgy works with traders but does not speculate on price changes for natural gas or electricity.

Check out the CNBC article: “Natural Gas could rise to $8: Energy expert

 

 

 

 

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