Is a Variable Rate Gas Plan Good for El Niño?
Depending on the weather, variable rate Georgia gas plans could be a good option during El Niño winter. Our weather tends to be colder than average during El Niño. However, during super El Niño’s past, there have been warmer periods. So, if the weather is warm and mild, skating through a few months on a variable plan and waiting for natural gas rates to drop could be a good strategy. But let’s dig into the details and discover if a fixed rate or variable rate gas plan is best for an El Niño winter.
Why a Variable Rate Gas Plan Could Pay Off
Several factors pointing to variable rates as a potentially good idea heading into an El Niño winter. Firstly, natural gas prices have been trending slightly lower. Additionally, the EIA predicts prices will decline overall in 2027. If that trend continues, waiting to lock in a fixed rate later could pay off.
Weather could also work in your favor. The 2015–2016 super El Niño brought the U.S. an unusually warm December. Similar weather this year would lead to lower demand. Lower demand in turn puts downward pressure on wholesale natural gas prices.
And there’s something else on your side: introductory variable rates. There are currently three introductory variable rate plans that offer low rates for the first month or two. For example, Georgia Natural Gas® has an intro variable rate of $0.399 for two months. Better yet, it drops down to $0.349 with their Greener Life® program free for one year. Keep in mind that following the intro period, the rate will be the natural gas provider’s standard variable rate. That rate today sits at $2.359, according to the GAPSC.
Waiting for Lower Rates Is Still a Gamble
The only problem with this strategy is rates may not fall. If fact, there isn’t much evidence that natural gas prices are headed for a dramatic decline. The EIA’s projected decrease for 2027 is modest, from $3.43-$3.28 wholesale. Meanwhile, natural gas storage levels heading into winter are around their five-year average. That’s enough to provide a reasonable supply cushion. But it doesn’t point toward a major drop in prices we see with high storage numbers.
Additionally, lower wholesale prices don’t translate to large savings on variable rate plans compared to fixed rates. Even during periods when Henry Hub spot prices have fallen sharply, standard variable rates will also drop, but they stay relatively high compared to fixed rates. Even during a warm winter, you’ll still be using more gas than summer most likely. And at high variable rates, those therms add up quickly.
So, grabbing an introductory variable rate for a month or two now could put you in a good position to get a lower fixed rate before winter. It’s very unlikely we’ll see such a mild winter or such a massive drop in fixed rates that sticking to a standard variable rate would be worth it.
Predictions suggest we’re in for warmer than average weather this fall. That makes it the perfect time to shop for your next plan, today at https://www.georgiagassavings.com.