Electricity is about immediate demand. Natural gas is about storage, transport, and location. Here's how to decouple your business from volatile spot markets.
Reading time: 12 minutes. Last updated: February 2026.
Unlike electricity, which is generated and consumed instantly, natural gas is a physical commodity that moves through pipelines. Your price is built from three main blocks:
The raw cost of the gas itself, traded on the NYMEX. This is the national benchmark.
The cost to move gas from Henry Hub (Louisiana) to your local utility's city gate.
The final mile. Regulated utility charges to bring gas from the city gate to your meter.
"Basis" is the difference between the NYMEX price and the price at your local delivery point. It reflects pipeline capacity and local weather demand.
If a pipeline into New England is full during a cold snap, the price of gas in Pennsylvania might be $3.00, but the price in Boston could hit $20.00. That $17 difference is the Basis.
Strategy: You can lock in your Basis separately from your Commodity. If you know pipeline capacity is tight in your region (like New England or NYC), locking Basis early is critical insurance.
Gas contracts often have strict operational tolerances. This is "Swing."
Typical for most commercial businesses.
You pay a premium, but you can use as much or as little gas as you need. The supplier absorbs the volume risk.
For industrial process loads.
You commit to buying distinct monthly volumes (e.g., 5,000 Dth in Jan). If you use less, you sell back at a loss. If you use more, you pay spot market rates for the excess. Much cheaper, but high operational risk.
Locks both NYMEX and Basis. Best for budget certainty.
Ideal for: Hotels, Schools, Office Buildings.
You pay the relevant month's closing NYMEX settle price + a fixed Basis/Supplier adder.
Ideal for: Sophisticated buyers who can hedge layers over time.
Gas demand is U-shaped: high in winter (heating), moderate in summer (peaker power plants), and lowest in spring/fall.
The best purchasing windows often occur in the "shoulder months"—April/May and September/October. Storage injection season is stabilizing, and winter fear premiums haven't fully set in (or have just faded).
Many commercial facilities consume both electricity and natural gas. Bundling procurement creates leverage you cannot get from single-commodity bidding.
See our Natural Gas Market Hub for current state-by-state gas pricing, or compare electricity rates on our Markets Dashboard.
Gas contracts are notoriously dense. Here are the clauses that cost businesses the most money:
If your actual usage deviates more than 10-15% from your nominated volume, penalties can be 150-200% of the spot price. Ensure your contract specifies a reasonable Daily Delivery Tolerance (DDT).
Auto-renewal terms that lock you in at the supplier's discretion if you miss a 30-60 day cancellation window. Always calendar your contract end date 90 days out.
Some suppliers add a "weather normalization" surcharge during extreme cold. This can add $0.50-$2.00/therm on top of your contracted price during the months you need gas most.
Gas contracts are notoriously opaque. We can audit your current Basis vs. NYMEX spread and find savings opportunities in the shoulder months.