ScottMadden, Inc. has released its spring Energy Industry Update, “It’s the End of the World as We Know It (And I Feel Fine),” focusing on trends in the natural gas industry, such as infrastructure development and price risk management.
According to the report, natural gas prices remain low across North America because of prolific shale plays. However, due to rising supply, gas pipeline development is increasing. In response to this current climate, some electric and gas utilities are investigating ways to hedge gas price risk while some regulators are questioning past hedging programs.
“We all want price stability and the lowest price possible,” said Greg Litra, partner and energy, clean tech, and sustainability research leader at ScottMadden. “But those objectives can conflict. While locking in low gas prices is a key goal for utilities that deliver gas or use it as a power generation fuel, balancing price stability with target price levels is as much art as science. It requires regulatory engagement, knowledge of hedging instruments and practices, and skill and experience to customize programs based upon local market dynamics and business objectives.”