Energy Basics, Pt.1. What is a therm?

Here’s one of the most basic terms in the natural gas market. You see it on your utility bills.

So…what does it mean? A therm is equal to 100,00 BTU, or British Thermal Units. A British Thermal Unit is the amount of thermal energy required to raise the temperature of 1 pound of water 1 degree Fahrenheit at sea level. Another way of looking at this is: a therm could raise 1,000 pounds of water 100 degrees, and we could all take a very hot bath.

Why “British”? Because the Brits were the ones to come up with this measurement – smart guys those Brits.

Here are some conversion basics for you to contemplate.

1 therm = 100,000 BTU
1 cubic foot of gas = 1,000 BTU
1 ccf = 100 cubic foot of gas

So 1 ccf = how many therms? Did you guess 1?

Actually, to be technically accurate, 1 ccf = approx. 1.08 therms. The conversion for this measure depends on the time of year; however, we can use an “estimate” of 1.08 and be fairly close. The thing to remember is that therms are measuring heat produced, cubic feet is measuring volume. Things other than volume can effect the amount of heat you get from a cubic foot of gas.

For price comparisons, note that they’re not exactly the same.

Other terms you will see: 1 Mcf = 1,000 cubic foot of gas = 1,000,000 Btu (1mmBtu) = 1dekatherm (dth) = 10 therms

Often times your utility company reads your meter in ccf. They convert that ccf into therms on your bill. The natural gas market trades in dekatherms (dth) and you will often see discussions about mmbtu.

And you thought I was going to let you off easy just because it’s almost Christmas! It’s all about following the zeros. More on following the zeros below.

On that happy note, next year we will discuss “Is there life on the Planet NYMEX.” Everyone at C2 Intl wishes you and your family a wonderful Holiday Season and a Healthy, Happy New Year.

If you’d like to run those numbers one more time, Give me a call and tell me what’s on your mind.

Check the NYMEX

NYMEX prices show evidence that speculators continue to flee this market, allowing traditional supply and demand to hold sway. While there is still short-term fluctuation as the remaining few try to grab quick profits, prices are trending in the direction of demand, and demand is very light right now.

This means natural gas is no longer following its earlier lock step with other speculative markets. While the stock market has enjoyed a sustained rally in anticipation of a new, more responsive federal government, natural gas prices continued to slide, reaching levels not seen since January of 2005.

This has been continued great news for Cost Containment Intl. customers, and we continue to find deals at a time of year when we are usually waiting out the winter price spike. Credit remains tight, but providers are looking to secure their own future, and for them, a secure future requires new customers. For energy costs, at least, this will not be the winter of our discontent.

What this means to you. If the words “blend and extend” aren’t part of your energy vocabulary, you need to learn about them. Give us a call at 877-265-2799, or click here to learn more.

The fireplace: a cutting edge concept

Cost Containment Intl. is committed to the concept of bringing our customers not just low energy costs, but high energy security. This is why, as discussed last week, we encourage customers to embrace secure, if boring, energy conservation. We also encourage them to consider a more exciting possibility: distributed generation.

Sound complicated? Actually, it’s an idea as old as the fireplace. In other words, energy produced on site. No miles of high-tension wires or underground pipes. While it’s unlikely you will ever meet 100% of your needs using onsite generation, it can take a substantial chunk off of your demand.

Distributed generation will play a significant role in America’s greener energy future. While we can envision massive wind farms and concentrated solar thermal assemblies, we also envision every structure using small-scale onsite generation to meet some part of the demand.

This is not as far-fetched as it seems. It has already begun in places where fossil fuels are expensive and solar is plentiful. In Jerusalem, 90% of buildings now use solar assemblies for hot water. All new construction in Hawaii will do the same.

We’ll be discussing some onsite generation options, involving both green energy and conventional fuel sources, in the next few weeks. Know your options. Cost Containment Intl. has plans for your long-term success.

Check the NYMEX

For you non-sailors: luffing is when the sail flaps back and forth, useless, caught between conflicting winds. It’s a sign that you’re going nowhere fast. Pretty much describes the stock market right now. Or any of the commodity or futures markets.

Right now, the markets aren’t fulfilling their purpose: allowing people to invest in, and profit from, well run businesses. The near-daily hundreds-of-points drops and rises are the result of short-timers and market gamers, looking to beat the odds and working on an investment timeline of days and weeks, not years.

Same for NYMEX. After a few weeks of following the fundamentals, natural gas prices are back to luffing, tossed about by multiple, independent forces. So we see that, despite an unexpectedly large withdrawal from storage (check the NYMEX), prices are down across the board.

It’s the long game that beats the house

We’ve been talking about hedging your bets the last few weeks. This week we want to talk about the one hedge everyone has: intelligence.

While NYMEX prices give you a short-term picture of the natural gas market, let’s also remember the long-term view. Click here to see the history of NYMEX prices since 1991. You can clearly see that, beyond the spikes, the overall trend is up. While the current under-$7.00 prices seem like a bargain compared to July, they’re well above prices from five and ten years ago. And we know where they’re going.

How they’re going to get there is anyone’s guess. There are too many forces in play at this point: the domestic market, the international market, the domestic economy, the international economy, the energy fundamentals, the role of speculators. Utilities don’t know where prices are going to be in six months or a year. Providers don’t know either.

So they hedge their bets by tightening credit, limiting terms, and pushing margins on locked-in rates. Cost Containment Intl. is proving more useful than ever to our customers as good deals become harder to negotiate. This is usually a fairly quiet time in energy…not this year.

But here’s where your intelligence, and your long-term view gives you another hedge. It’s energy conservation. That unglamorous, unpublicized, “eat less, exercise more, get enough sleep” side of your overall energy picture. Cost Containment can go beyond price reduction and simple strategic planning: we have a variety of energy audits that can help you eliminate waste, tighten down use and raise efficiency.

The assumption is that conservation means added expense, productivity loss and decreased comfort. Not so. We usually find conservation measures that can be instituted at minimal cost and with minimal impact. There is always low-hanging fruit. And return on investment happens faster with every inevitable upturn in prices, because energy not used is always free.

Hedge your bets by knowing your options. Cost Containment Intl. has plans for your long-term success.

Check the NYMEX