Hedging LDC price risk in the futures market
- Brooklyn Union Gas Co., NY (USA)
During its first five months the natural gas futures market has seen steady growth and increasing participation by various industry players, particularly producers, marketers, and brokers. Not much has been heard, however, about participation by the principal retailers of the gas industry, the local distribution companies (LDCs). Undoubtedly, various LDCs are now in the process of determining whether or not the gas futures market can serve any useful business purpose in their operations. In examining this question LDCs should keep in mind that the futures market should serve the same purpose for them as it does for any other business engaged in the actual buying and selling of price-volatile commodities - mitigation of price risk. This article looks at the risks of the market, gives examples of investments to hedge risks and looks at the overall performance of the market.
- OSTI ID:
- 5363322
- Journal Information:
- Public Utilities Fortnightly; (United States), Journal Name: Public Utilities Fortnightly; (United States) Vol. 126:9; ISSN 0033-3808; ISSN PUFNA
- Country of Publication:
- United States
- Language:
- English
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