Week two, and we’re still trying to get that elusive NYMEX price. We discovered last week that there was a major infrastructure obstacle in our way: how to get the gas from Louisiana to your meter.

So we’ve agreed that we’ll pay the utility for delivery. They charge everyone the same rate, so that part of our price is a given. But nothing is preventing you from being your own supplier. Natural gas is an open market, and anyone can buy on an open market. Will this get you the NYMEX price?

Let’s see if you’re cut out for the job. Here are the steps you must follow:

1. Set up a line of credit to purchase NYMEX futures contracts. Not cheap, but the price of doing business.
2. Calculate your monthly usage for the next 12, 24 or 36 months. You want to make this as accurate as possible, as we’ll see later.
3. Buy your gas. Depending on your savvy, you might get the NYMEX settle. You might even beat it. And since these are futures options, you can also buy as far into the future as you want. Is now the right time to buy? Natural gas prices have gone from a high of almost $14.00 to a low of under $5.00 in the past year. Stakes are high.
4. You’ve got your NYMEX price. Take a moment to enjoy it. Because now you’ve got some decisions to make.Remember how the utility is handling delivery? That’s local delivery. Depending on your area, the utility might handle delivery within your state, within a few states, or within just a part of your state. You’ve still got to get a pipeline operator to move your gas to the local gate.Welcome to the world of basis, or pipeline transportation costs. This is going to add to your cost, and it’s also going to add a few new wrinkles to your purchasing plan.
5. Does your monthly usage round out to a multiple of 100,000 therms? Anything below a full contract volume of 100,000 therms, or 10 million cubic feet of gas, will carry a purchase premium, since part of the contract needs to be sold back as an odd lot. So you’ll either have to buy more than you need, and pay someone to store it, or pay the premium.
6. Sign your contract with the pipeline owner(s) for transportation of your gas. There might be three or four involved, depending on where you are located relative to Henry Hub. If you have bought more natural gas than you need (to avoid the premium) you will also have to consider the transportation charges to deliver it to and from storage.Your interstate pipeline contract(s) will require irrevocable lines of credit before anyone will do business with you. Again, not cheap.
7. Now comes the fun part. You’re bidding for space on the pipelines with a multitude of other customers. Pipelines operators think in terms of block of BCF…that’s billions of cubic feet of gas. If your gas totals are lower, they will tack a surcharge onto your bid. They might also require that you purchase additional capacity beyond your actual gas to make it worth their while.
8. If, rather than buying too much natural gas for the month, you buy too little, get ready to do this all over again on the spot market to make up the difference. Needless to say, buying from necessity on the spot market is not where you find the best prices.
9. Remember, the NYMEX settle is the daily average. To really get the best price, you need to be on top of the market on an hourly basis to catch the lows when they happen.
10. If, after all this, you didn’t read the market correctly, you probably don’t want to read tomorrow’s paper.

Actually, we simplified things a bit. All right, we simplified things a lot. But you get the idea. You natural gas supplier, as the song says, works hard for the money.

What this means to you. The NYMEX price only tells part of the story of what you should expect to pay for your natural gas. Our weekly report gives you a way to track how prices for both natural gas and electricity are trending. As the market is going, so go the deals that will be available to you as a consumer. Track the trend, not the actual listed price.

At Cost Containment Intl., we appreciate the hard work and expertise on the part of your supplier to get your gas to your burners. This doesn’t stop us from using our own hard work and expertise to put together the best plan and then grind down the best price for you.

The best way to get the best price is still to give us a call.

Check the NYMEX