When it comes to purchasing energy, most people wait to purchase until their tank is empty or when they receive an offer to sign up for a new contract. Sometimes, you can get lucky with a low rate using either of these two methods, but if you want to truly control your energy costs, you need to understand when it’s the right time to purchase energy.
The energy market is constantly changing and fluid, which makes it tough to see patterns and pinpoint the best time to purchase energy, but it’s not impossible. Take a look at our five tips on determining the best time to purchase energy.
Pay Attention to Weather Forecasts
It’s no secret that weather impacts the energy market – when it’s hot, the demand for electricity increases, and when it’s cold the demand for heating fuels increase. Knowing when a predicted heatwave is coming or when the polar vortex decides to rear its cold, ugly head is good to know because energy prices will increase during these weather events. There’s no clear-cut answer for all energy types but, as a best practice, it’s wise to purchase natural gas during the summer because it’s primarily used as a heating source.
Understand Energy Supply and Demand
Supply and demand, one of the primary economic drivers, has an immense impact on energy prices. Propane is produced year-round, so there is little change in the output for supply, but the use of propane is highly seasonal since much of the propane produced is used for heating. Since the majority of propane is produced domestically, a severe cold weather streak that increases demand can create a price spike because it is difficult and slow to obtain imported propane.
Stay Up-to-Date on Proposed State- and Federal-Level Energy Laws
The influence of political change can extend all across the energy market. Even small acts of legislation can send shockwaves through the market as energy is innately tied to politics because the supply of energy is such a large-scale procedure. Paying attention to proposed energy laws and the ramifications they could have on the energy market will help you to understand the impact and navigate price fluctuations in the market.
Know Where Your Energy Comes From
Do you know where your energy comes from? The farther your energy has to travel to you, the more it could cost. Damage in transportation methods, such as oil spills, pipeline ruptures, or damage to the electricity grid, could cause inflated prices. Understanding the method of delivery can help you stay on top of price spikes.
Global Event Factors
Despite the growth in shale natural gas production, major changes in global oil supplies can affect our domestic energy costs. Factors like tariffs, war, trade negotiations, and catastrophic weather events can cause price spikes in the United States. Staying up-to-date on current global events can help you understand price fluctuation in the energy market.
Understanding how these factors can impact the energy market can help you purchase energy at low prices, but it’s not an exact science. Looking back through past energy bills and having a conversation with your energy provider about future prices can also help you to scope out the best time to buy energy.
For more information on energy prices or how we can help you navigate the energy market, please call us at 1-800-427-8545 or visit the Commercial Energy section of our website.