Should the Use of Hedging by Canadian Natural Gas Distributors Be Encouraged by Regulators?
DOI:
https://doi.org/10.15173/esr.v5i1.291Abstract
The natural gas industry has undergone dramatic change in the last decade as a result of deregulation. In this article, we consider the desirability of yet another innovation: the active use of natural gas futures and other financial derivatives by local distribution companies for price hedging purposes. Given the potential savings of short- relative to 'long-term contracts, the increasing security of supply. and the salient possibility of low (if not negative) costs in using these contracts, we argue that regulators should take a close look.
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