To lock or not to Lock

Chuckles_4

When you gamble, the odds always favor the house. They wouldn't offer a rate if they didn't think they would make money on it.

Rodney Summers

To lock or not to lock?

12.75 per m for 5 years through East Ohio Gas (Dominion)
Is this a good idea? I know we are at an early premium rate for the season but I checked last years peak price in January/February and it hit roughly 11.75 per m.

There is an opt out with a 100 dollar fee which makes me think this may be a good move if price move to $15- $17 like the "experts" are predicting.

opinions?

Jason_15

go for it!

I would. Actually I did for the first time this year as well. Prices seem too unpredictable. Think of it as insurance- even if prices go down a little- oh well. And you know there isn't any way they are going down too far.....

jim lockard

5 years

At todays rate sounds like a no brainer. Best Wishes J.Lockard

jeff_51

I don't know about there but

here gasoline prices have dropped about 40 cents a gallon in the last couple of weeks, which means demand is down, but then again we have less refinery capacity then we did twenty years ago and that is the real problem and it does take about five years to build a refinery IF you can get the permits. So who knows, but I suspect as the previous post suggests, they wouldn't be offering that price if they though the cost of oil was going to go up appreciably

Steve Ebels_3

Interesting

The utility must believe that they can safely lock in at that price. That would lead me to believe that they think gas will be fairly stable for that period of time. Interesting.

[Deleted User]

Pat this is a fairly

good deal. The reason the utility wants to do this is that they can lock in purchase of a quantity of gas for the next five years with their suppliers. They also get a price break when they do this. They also buy an insurance to protect them if prices go through the roof. I worked for a utilty for 28 years and this is a typical type offer.

Simple truth if the winter is a normal one they make money. If it is a steady number of days below 20 degrees they may lose money. Gas and oil company's make max profits when temps are between 20 to 30 degrees outside. When it goes below that they have to purchase extra gas or oil at premium prices. This is also why many gas companies have invested in LNG (liquified natural gas) to cover those high demand times. Some other companies will mix propane air with NG to cover demands in excess of purchased gas. It is all economics of supply and demand.

Then again some utility charters guarantee them a profit so no matter what they make out.

All of these type of things are a gamble at the least. It is pretty unlikely that prices are going to go down. More likely they will level off for a year or so.

Just pray for peace in the mid east and good weather in the Gulf.