Index Based (Variable) Pricing Strategy
An index-based price strategy offers the flexibility of pricing that reflects wholesale market conditions and often includes the ability to make adjustments when the market drops.
- Index-based pricing offerings enable businesses to purchase their natural gas at prices derived from the NYMEX and Gas Daily indices
- Often provides flexibility to respond to favorable market conditions while floating on market prices
- Saving opportunity as risk premiums associated with fixed-rate strategies based in the future & forward markets are avoided
- Purchase the natural gas commodity at a daily index price, while obtaining a fixed rate for the more volatile transportation cost of the commodity to the region (commonly referred to as “basis”)
- Potential risks include market risk when gas prices are highest or have sustained upward trends (allows for potential savings, but at times you could be subject to the highest prices)
Can I choose an option that allows the benefits of an index-based price strategy but also mitigate my exposure to the highest prices?
Yes, Patriot Energy does offer a hybrid natural gas strategy allowing for some amount of budget control while also providing the opportunity to take advantage of lower prices in a falling market. Speak with an energy advisor at Patriot Energy today to better assess your needs and determine which strategy is the best fit for your business.
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