Preparing for successful gas negotiations

The task of understanding and managing all the variables required to optimize the reliability and cost of gas purchases is not an easy one. The following list of recommended steps may help. Study your gas requirements and bills thoroughly. Evaluate all of your options and risks in detail. Set specific goals for your gas needs and management. Negotiate each contract on both a short-term and long-term basis. With increased competition, suppliers have even more incentive to make their clients happy. Make sure that you understand all the details of your new contract including expiration dates, automatic rollover dates, notice requirements for changes and force majeure limitations. Monitor the results of the pricing index that you select to assure that it will provide you the results that you have in mind. Cautiously shop around for the best prices, but keep in mind that it is a small world and price shoppers may find it increasingly hard to get a quote if you change suppliers too often. Don't forget to compare your local LDC with other suppliers. They may have become more competitive and ready to offer more services at less cost than before. Keep in touch with the market changes on a regular basis. Assign the daily management responsibility to a staff person, or outside firm, that has demonstrated a complete understanding of the gas industry and your specific needs. The bottom line is clear when one compares the cost of industrial gas 10 years ago to the current price today. The average burner tip price to industrials/mcf was in a range from $4.50 to $7.00 in the mid-1980's. The mid-1990's average price is in a range from $2.60 to $3.60. This proves that the additional management that is required is well worth the additional effort