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Natural Gas Price Increase: Now is the Time to Check Your Energy Contract

The more informed you are, the easier it is to manage your energy costs and consumption. That’s why at Spark Energy we strive to keep our customers informed of what’s happening in the energy sector. 

If you follow the oil and gas industry market data you may be aware that natural gas prices are on the rise. Typically, prices increase in the winter, but this fall already saw spikes that sent natural gas prices three times higher than the same time last year. The Energy Information Administration (EIA) recently released its Winter Fuels Outlook report for 2021 that predicts energy prices will be higher this winter compared to last winter, and it’s not just a part of the COVID-19 recovery.

What’s Causing the Rise in Natural Gas Prices

Whenever there’s a price spike in energy prices the first question is always, why? What’s happening right now comes down to a number of factors. 

Natural gas prices dropped steeply a year ago as the world was in the middle of the pandemic and demand was down. That meant gas and oil prices plummeted causing production to drop off steeply because there simply wasn’t a return great enough to encourage natural gas producers and oil companies to drill. Now that the world is emerging from the pandemic, the combination of a spike in natural gas use, lagging natural gas production and distribution slowdowns has caused natural gas prices to reach record highs. 

It’s a simple case of demand outpacing supply on a worldwide scale.

But there’s another compounding factor. The National Oceanic and Atmospheric Administration (NOAA) forecast predicts this winter will be much colder than the last, and that is going to play a role in natural gas prices as well. When the temperatures drop the heating demand for natural gas gets even higher. Essentially, the colder it gets this winter the higher the natural gas prices will go. 

These circumstances are affecting everyone along the supply chain. Suppliers like Spark Energy are also feeling the effects of rising prices. Some businesses will also be heavily impacted by the price changes. Local governments that aren’t in deregulated areas may find themselves in a weaker bargaining position if they are in the process of negotiating rates with utilities. 

This natural gas situation that can feel frustrating, but some consumers will be able to mitigate the effects of rising natural gas prices better than others. 

Why It’s Time to Check Your Energy Contract

If you’re in the process of signing up for an energy plan you’ll want to pay careful attention to the type of fuel that’s used to provide your electricity and heat. All types of fuel are more expensive than last year, but some are more costly than others. Electricity prices overall are expected to be 6% higher year-over-year. The higher costs increase will be felt in homes that are heated by natural gas since prices are expected to be 30% higher. 

Although natural gas heating is still roughly 40% less expensive compared to electricity, consumers will feel the impact much more on their monthly bill. And that’s a lot of households considering that half the country gets their heat from natural gas. 

Even those who use electricity for heat can be affected if the electricity is generated by natural gas. In fact, experts say we all need to brace ourselves for a continued increase in electricity prices as coal plants are shut down and we rely more heavily on natural gas for power generation.

Anytime the prices for natural gas are anticipated to increase, it’s a good time to review your energy contract if you live in a deregulated area. There are a few key reasons why:

  • If you have a variable rate plan you are susceptible to price increases at any time and will likely end up paying much more than you were previously. You may be able to make the switch to a fixed rate plan, lock in a price per kilowatt-hour and avoid some of the worry about rising costs. Check to see when your contract expires. If it will expire this winter, start looking into a fixed rate plan.
  • If you have a fixed rate plan that can be renewed it might be financially beneficial to do so since the price per kWh could go up. If you don’t renew, your new plan will be based on the current kWh rates. Keep in mind there is usually a window of opportunity to renew, so check the timeline for renewing in your energy contract. Spark Energy gives customers the option to renew their energy plan within 30-60 days of the plan’s expiration. 
  • Those who have a long-term, fixed rate plan may feel little to no effect. If you are still a ways out from the expiration of a fixed rate plan you can rest a little easier knowing that your energy plan isn’t impacted by the natural gas price increases that are currently happening. But keep an eye on how natural gas prices fluctuate in the coming months so you know what to do when it is time to renew.  

What is currently happening with natural gas pricing is a perfect example of why it’s critical to know how your energy plan is structured and why fixed rate plans provide stability. Natural gas commodity prices are changing every day. They go up and they go down based on global demand. It’s very volatile, and many factors are completely out of anyone’s control.

But what you can control as a consumer living in a deregulated area is the energy plan you choose. Considering all of the features, not just the price per kWh and therm, will help you find the best energy plan for your needs now and into the future. 

Have questions about the change in natural gas prices? Need help determining if a renewal option is best? Customers can contact the Spark Energy customer care team directly by phone or email. You can also visit our informative Energy FAQ section to get answers specific to your state.

We’re here to help you make the best energy decisions for your home or business! 

 

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*Certain Terms and Conditions apply. This offer is available to first-time customers only. Customers must sign up for a fixed-rate energy plan. The plan may include a monthly service fee depending on the product. Use promo code which is showing above to qualify. Rate expires at the end of the term. Canceling or changing supply service prior to the end of the fixed-rate term may subject the customer to an early termination fee based on the product details. To be eligible to receive Spark Energy rewards, customers must enroll in a fixed term plan and maintain an active Spark Energy account in good standing (no past-due balance owed) for 45 days after the beginning of service. May not be redeemed for cash. This offer is subject to change or cancellation without notice prior to customer acceptance. This offer is nontransferable and cannot be combined with any other offers. This offer applies to services areas where Spark Energy LLC is active. The offer expires on 12/31/2021. See the Terms of Service and Electricity Facts Label (applicable only for TX) at www. SparkEnergy.com for more details.
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