News / Business
Analysis Helps Businesses Improve Natural Gas Purchasing Process
Learn how to implement a natural gas risk management strategy that will improve your competitive edge.
In its latest analysis, Natural Gas Buying Guide, Valerie Wood, President of Energy Solutions, Inc., helps buyers better understand future natural gas market conditions. "An improved understanding of what to expect helps buyers articulate their natural gas buying objectives today," says Wood.
The analysis also points out that there are a lot of what-ifs.
- What if the government authorizes the exportation of domestically-produced supplies at Liquid Natural Gas (LNG) terminals other than the one in Alaska?
- What if the chemicals used in hydraulic fracturing create some sort of groundwater contamination that can be easily traced to horizontal drilling and shale plays?
- What if geologists determine that the 700 earthquakes in Arkansas over the past year are in some way linked to the increase in horizontal drilling in the Fayetteville shale play?
- What if the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act causes a mass exodus of speculators from natural gas markets?
- What if the nation’s
regulatory policy begins a more rapid promotion of natural gas fired-electric
generation?
According
to Wood, “These are events that may or may not happen, and therefore, one
cannot really prepare for them. However,
if a business has a prudent and disciplined approach to natural gas purchasing,
market-moving events of this nature become manageable and not nearly as
budget-threatening as they could be to companies who have not been proactive in
their natural gas purchases.”
In addition, the extreme
net short positions of speculators and hedge funds create an unknown in the
marketplace that is difficult to gauge. These players have held onto these
positions for close to three years. Because
they have retained their positions through colder weather, hurricanes, and
other fundamental price-driving factors, it appears that these players are
waiting for solid economic recovery to be in place before their perception of
the future is going to change. Therefore, Energy Solutions, Inc. believes that
the price turning point for natural gas will be determined when the speculative
sector believes the downside has been exhausted, and that determination is
likely to be driven by information that is consistently turning increasingly
bullish.
The
market hasn’t yet reached that point. There is not consistent market data. However, Natural Gas Buying Guide helps buyers become better prepared in advance of reaching that point so when the time is right, they are ready to act.
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About Energy Solutions, Inc.
Formed in 1996, Energy Solutions,
Inc. is independently owned. With more than 50 years of experience in the
natural gas industry, our team focuses on natural gas prices and in helping
businesses improve their internal processes for the purchase of natural gas.
