by G.H. Scott
Published in the Las Cruces Bulletin 10.08.21
Las Cruces Utilities (LCU) Deputy Director Business Services Jose Provencio who works with the team that is responsible for acquisition of short-term, intermediate, and long-term supplies of natural gas for the city-owned utility, sometimes they could use a crystal ball. But since a crystal ball is not available, the LCU team relies on more traditional forms of forecasting demand for natural gas every month. “The team looks at a variety of data points, from what LCU ordered in past months, to transmission pipeline conditions to spot any issues, daily gas prices, including long-range weather forecasts, and even after a purchase decision is made, the team continues to make adjustments throughout the month,” said Provencio.
Lately, Gas Business Analyst Mario Puentes has kept a close eye on the commodity market as natural gas prices are doing something they haven’t done in over seven years, dramatically increase. “Prices normally go up in the winter, but, of course, it's not winter yet. And prices in the U.S. have already gone up two or three times higher than where they were last year,” said Puentes. Experts point to several factors for the price rise in natural gas. Supplies have been depleted by a series of 2021 weather events. The historic February freeze in Texas lifted demand while clogging wells with ice. Just recently, Hurricane Ida forced nearly all the Gulf of Mexico’s gas output offline, and the recovery is slow.
It's not just cold winters that boost demand for natural gas. Hot summers do it, too, because air conditioners use electricity. And as coal plants get retired because of environmental concerns, when they get shut down, you still need electricity from other generating resources such as gas fueled combustion turbines. That boosts demand for natural gas. And as we head into winter, supplies are tight and the market analysts who monitor natural gas prices don’t see that changing anytime soon. One of the reasons goes back to recent years when oil and gas got incredibly cheap, prices were so low that producers had no financial incentive to drill.
What does this mean for LCU customers? There is a strong possibility that monthly utility bills will rise this winter because of the price increase of the fuel. Remember LCU supplies gas to its customers as a pass-through cost without a mark-up or profit. “However, our (LCU) business analysts closely monitor market prices daily and do their best to get the lowest price available to help our customers manage their monthly budgets,” said Provencio.
LCU customers do have a tool to help them manage their monthly utility bills this winter, by monitoring their natural gas usage. LCU unveiled UtilityHawk earlier this year, the service is free service for customers, and works on smart phones, laptops, and tablets, take the time to register at LCUtilityHawk.com.
LCU Customer Central can be reached at 575-541-2111 from 8 a.m. - 6 p.m. Monday through Friday. LCU provides clean, safe, and reliable services to Las Cruces residents and businesses. Learn more at: las-cruces.org/180/Utilities For emergencies, call Dispatch at 526-0500.
PHOTO 1: LCU Associate working high-pressure natural gas line-Courtesy LCU