{"id":12544,"date":"2023-01-29T11:58:24","date_gmt":"2023-01-29T17:58:24","guid":{"rendered":"https:\/\/planetlaundry.com\/?p=12544"},"modified":"2023-01-29T11:58:24","modified_gmt":"2023-01-29T17:58:24","slug":"some-good-news-on-the-energy-front","status":"publish","type":"post","link":"https:\/\/planetlaundry.com\/some-good-news-on-the-energy-front\/","title":{"rendered":"Some Good News on the Energy Front?"},"content":{"rendered":"

CLA Energy Program Provider Shares an Update on the Natural Gas and Electricity Markets<\/h2>\n

I\u2019m excited about utility costs in 2023.<\/p>\n

OK, before you assume that I\u2019ve lost my mind, let me reiterate that I\u2019m truly feeling positive about this year for many reasons \u2013 not the least of which is the much needed relief or downward movement we\u2019ve started to experience in market prices for natural gas and electricity.<\/p>\n

Although these changes may take some time to filter down through to suppliers\u2019 and utilities\u2019 prices and price offerings, it\u2019s a very promising direction for today\u2019s consumers.<\/p>\n

First of all, let me clearly state that I am in no way diminishing the very real utility cost crises occurring in many markets across the U.S., where some laundromat owners are reporting the doubling and tripling of their monthly energy bills.<\/p>\n

Just choosing one state as an example \u2013 among the three major utilities serving customers in California, I\u2019ve heard of prices doubling in some cases, dating back to August 2021. Electricity prices in the state are 50 percent higher and natural gas prices are 8 percent higher than the rest of the country, according to a recent report by the U.S. Bureau of Labor Statistics. For laundry owners in California or other markets where utility costs are skyrocketing, I strongly believe that you must find a way to pass along these costs. No one wants to raise vend prices on their customers, but we\u2019re all too familiar with increasing costs at the moment.<\/p>\n

With that said, natural gas prices have seen a more significant drop since they directly affect what utilities and suppliers offer to their customers. Electricity prices have come down as well, but since natural gas is only a partial component of electricity, the drops in price haven\u2019t been as drastic.<\/p>\n

Consumers saw record prices reached in 2022 \u2013 in fact, some of the highest prices seen since the major price spikes back in 2008 and 2011-2012. Fortunately, as I write this article, natural gas prices have retreated to prices closer to where they were 18 months ago. The current market price is $3.70\/MMBtu.<\/p>\n

This price drop \u2013 which started in late August 2022 \u2013 is nothing that I\u2019ve ever seen or experienced in my career, dating back to 2010. Given the sharp rises we saw last year, I\u2019m still surprised that prices have come down this quickly.<\/p>\n

Our firm was projecting this drop in price near the end of the first quarter of this year. And I saw predictions in 2022 that the market price for natural gas could go to $10\/MMBtu and possibly all the way to $15\/MMBtu, if temperatures got frigid. However, so far, it\u2019s been the opposite \u2013 and, for the most part, it\u2019s been a rather mild winter.<\/p>\n

We were hearing predictions of a colder than normal winter, which seems to be the norm for the last several years. If you look back to 2016, the market price of natural gas has declined more than it has risen during the winter months.<\/p>\n

Essentially, there are many factors that can determine utility prices these days \u2013 factors on which we never used to focus and that go beyond the basics of supply, demand, and the weather.<\/p>\n

Natural Gas\u2019 Wild Ride<\/h3>\n

On August 22, natural gas reached a ceiling of $9.30\/MMBtu. As we moved into September, the monthly high reached $9.00\/MMBtu, but by the end of the month, the price had retreated to $6.84.<\/p>\n

Prices remained steady in October, then increased to a high point of $7.50 in November. In early December, prices declined sharply, before rising to a mark of $6.75 on December 13 \u2013 before arriving at their current position.<\/p>\n

The above synopsis supports the graph I\u2019ve provided below, showing natural gas market prices from July 2021 through the present:<\/p>\n

Take Control of Your Utility Costs<\/h3>\n

This year should bring laundromat owners some great opportunities to secure their places in the market, even if they\u2019re currently under contract or with a utility. (Of course, at this point, I need to mention that some store operators may not have the opportunity to work with an energy consultant or a supplier, simply because their utility\/gas or electric provider doesn\u2019t participate in deregulation. Telling owners they\u2019re located in one of those areas is the toughest part of this business.)<\/p>\n

I have had many conversations with laundry owners and current customers, going back to February and March of 2022, when natural gas prices began to rise sharply. And the overwhelming question was: should I lock in now or wait?<\/p>\n

My advice in those situations is to never panic and never lock in a rate when prices are on the rise so steeply. I\u2019ve witnessed too many people do this over the years, and it didn\u2019t turn out well for them, as they locked in a high rate for a long term. Commodity markets \u2013 no matter what the product is \u2013 go up and down. No doubt, we always hope that the valleys are longer than the peaks and that we catch these valleys at the right time.<\/p>\n

With that said, here are a few actions items for you and your laundry business to take advantage of, given the current market:<\/p>\n