Panic is usually not a “good” thing. But, panic can be used to highlight extremes.

Last winter (2013); “Polar Vortex” came into most people’s vocabulary. Bitter cold extended over most of the continental United States. The result: a panic to higher spot price for natural gas. Recall supply and demand. The panic occurred due to “bottlenecks” in supplying natural gas and electricity.

This winter (2014) began yesterday (December 21, 2014) and the panic has resulted in natural gas prices dropping about 35% since end of Nov 2014. The reason: it’s not as cold as expected and the forecast is about Normal or average winter cold. So traders sold their position in natural gas (the NYMEX futures).

Volatility of natural gas is nothing new. So, if you are an end-user, what should you do? Look ahead…

1.      If you didn’t already, think about locking in your Feb and Mar 2015 price. Recall the old adage; Hogs get slaughter, pigs live on.

2.      Do not lock in a long term (beyond 6 months). Summer prices have not moved as much as this winters.

3.      Talk with your supplier about what this means for your 2015 budget.

Do not think like a trader and try to buy at the bottom; the reasons are many and the benefits are few (compared to the downside). Instead, look at what this means to your budget and plan accordingly.

Realgy is a full-service energy provider and would appreciate an opportunity to speak with you about your energy needs.

http://www.cnbc.com/id/102289402