Texas businesses still have a good opportunity to lock-in a cheap electric rate thanks to falling natural gas and oil prices, but businesses should not wait too long because OPEC is accelerating the date for an emergency meeting where the cartel is expected to cut production in hopes of raising prices, while gas producers are announcing plans to scale back drilling due to lower natural gas prices.
That means the window on lower energy prices may be closing, and Texas businesses should shop around for a cheap fixed electric rate now, before rates start rising again. Natural gas, the driver of Texas electric rates, has fallen about 50% since summer spikes saw $13/MMBtu, and trading last week saw prices hit the $6.40 mark. However, lower prices mean producers are starting to shut-in production wells because the price cannot cover extraction. The Federal Energy Regulatory Commission last week reported several companies have announced plans to shut-in rigs, raising the specter of rising prices from reduced supply, while the total count of U.S. oil and gas rigs fell by 14 last week.
Meanwhile, OPEC moved a planned emergency meeting originally scheduled for late November up to October 24, in a response to the sharp decline in oil prices, with oil closing at $69 on Thursday, about $60 lower than recent highs. Analysts expect OPEC to cut production 500,000 to 1 million barrels per day in an effort to raise prices, which would likely reverberate throughout the energy market.
With natural gas and oil supplies potentially shrinking in the coming weeks, the currently low electric rates may be put under pressure to rise as wholesale energy prices increase. That means the opportunity to lock-in a long-term, fixed electric rate may be disappearing. Texas businesses looking to save money on their electric rates should shop for the best rate now, before prices start rising again.
Cities and counties in Texas have realized the current buying opportunity, and are acting to lock-in today's favorable prices. Municipal leaders have recognized the "short-term window" of cheaper electric rates and are acting to save their taxpayers money by shopping around.
While cities can hire attorneys to draft custom Request for Proposals for their electricity deal, Texas businesses can get the same power of competition without forking over thousands in legal fees. All businesses have to do is do a bit of research to quickly and easily get competing quotes from several energy providers, ensuring they get the best rate possible.