4 Reasons to Hedge
Hedging against energy price risk means strategically using financial instruments or market strategies to offset the risk of any adverse price movements.
Thus hedging, for the most part, is a technique that is meant to reduce potential loss (and not maximize potential gains).
Hedging can also be used to improve or maintain competitiveness.
Companies don’t exist in isolation; they compete with other domestic companies in their sector as well as globally
Companies attempt to hedge price changes because those fluctuations are risks peripheral to the central business in which they operate.
Firms that have good risk management programs can use this stability to reduce their cost of funding or to lower their prices in markets that are deemed to be strategic and essential to the future progress of their companies