Natural gas prices

[jpb]

I have owned my laundromat for a week now and was wondering if anyone hedges their gas prices? I used to trade futures and commodities and was wondering if anyone hedges their prices? I spoke with my local gas company and they are willing to sell forward contracts so I can lock in my prices for two years. I'm thinking of going long natural gas forward contracts because I feel that the price will continue to increase.

[Jefflange]

Has anyone used Hess for natual gas?
What program did u go with?
http://www.hessenergy.com/products/naturalgas/index.htm

[BUTTERHEAD]

I have not used HESS, but I do have a NYMEX + Basis contract. Mine is NYMEX + $0.0699

[Howard]

jpb - If you could accurately project gas prices why are you bothering with the laundry business? Seriously. Will prices go up, or are we at the apex before the bubble bursts? I have locked in prices, let them float, or done a mix - almost always get it wrong.

You can get a contract from most suppliers, but it is a crap shoot. If you can't stand the swings then by all means lock it in.

If you know what gas will do sell the mat today and put the money in the futures market - the returns are much greater if you are certain. (Just having fun with you)

[jpb]

Howard,

Good reply, I agree with you. I guess I was just looking to see what others are doing.

I have been in the market as a speculator for many years but it is different now that I own a laundromat.

- John

[BCW]

Well Howard the analists are projecting Nat. Gas to go higher. Many corporations have switched over to it and many more are planning to. If we have a Hurricane or two this year in the Gulf area prices will soar. The current price may look good when looking back in Nov. I know what you mean by no matter which way you go you end up shooting your self in the foot.

Tom

[Howard]

While many are predicting that, that does not mean it will happen. The heard mentality causes this. There are factors leading to demand, but pricing right now has nothing to do with supply demand - it is all being driven by a speculation. Just like we saw a tech bubble, now a housing bubble, we are very likely to see an energy bubble soon. I was listening to one "expert" yesterday that said when that bubble bursts oil now at $125/bbl will likely drop almost overnight to $50/bbl. Natural gas will take a similar hit. Is that tomorrow - probably not, but is it next month, next year - who knows exactly when. But these current high prices will not be sustainable unless there is some huge supply interuption.

[Steven04]

Well, I hope the energy bubble bursts soon, we all need a break from high gas prices at the pump and at our mats. High energy prices are weakening our U.S. dollar and is definitely affecting our economy.

[MatNapper]

Howard - I pray you are right - but my common sense tells me you are not. The tech bubble isn't comparable to the energy shortages we'll have coming down the road. There are "factors leading to demand" - like a few billion Chinese and Indians that are just starting to get a whiff of a somewhat middle class life and also starting to buy cars in droves. The demand on oil is compounding quarterly (Goldman Sachs said $200 a barrel by maybe next year??) - rolling into additional demand for nat. gas - which is why maybe we should be at a dollar a spin for dryers now to hedge against what's coming -- see attached Fed article:

http://laundrycapitalist.blogspot.com/2008/05/fed-report-natural-gas-prices-will.html

[BCW]

Howard, now don't take this wrong. I'm not disagreeing with you to be arguementative. I have followed the markets for a number of years now, as I'm sure you have. There are many factors that influence what happens to the market on any given day. Things that you can count on happening such as margin calls and contract expirations, short covering, market volitility, or lack of, etc. The one thing that is most predictable, for me, is what the most people are saying. If enough people get on and say for example that the market is over sold now and ther will be a flurry of buying because stocks are cheap and the multiples are good, that's exactly what happens. If you listen closely they will tell you what is going to happen next with great accuracy. Currently there is a big noise about continualy rising nat gas prices. If they keep saying nat. gas will rise in price, it will. The markets are man manipulated and that is a sure bet.

Tom

[Howard]

What you are saying is true. The thing is they go along like this for a while and then without any real warning a bubble can burst and things come crashing down as investors bail. We are in such an energy market right not. That does not mean that oil will drop from 125 before it goes to 150 - but it will drop. When it does it could be a free for all crash. We saw this happen in 2001 when oil went to $12 a barrel. IT won't drop that low now for many reasons but it could be cut in half in just a matter or a few weeks.