We’ve been receiving many calls about the exorbitant prices of natural gas lately. It is stressful having yet another obstacle to keeping costs down and staying open. For one operator, the January bill was $4300. The February bill increased to $13,200. Other operators contacting us have similar jumps in gas costs. While we do not have any quick fix to this problem, we did look into the “why” and wanted to share some points from experts:
From Tiger Natural Gas: Please be aware that natural gas prices within the NMGC service area will be SUBSTANTIALLY HIGHER on your next month’s invoice. The price for natural gas throughout the State of New Mexico in January has increased due to a rise in consumer demand for electrical power generated from natural gas-powered utility plants throughout the Western US states. This is due in part to drought conditions reducing hydroelectric generation, lower wind and solar output, as well as overall increase in electrical usage. If you are on a variable index pricing structure, we are anticipating your price will be much higher than in previous years.
From a blogpost from RBM Energy: Clearly, markets in the western Rockies and along the West Coast were left scrambling for gas molecules and forced to pay steep premiums to get their hands on them. At the same time, markets in the eastern part of the region remained disconnected and seemingly unable to respond to the widening differentials to the west. What triggered the supply shortage and why the “great divide” between the West Coast/Western Rockies and the more easterly markets? Well, in the immediate sense, the trigger point for the West Coast price spikes was extreme, unseasonably cold weather. Even before that, however, a number of factors had primed the West for gas supply shortages this winter.
For one thing, a low water year and supply-chain issues meant that both hydroelectric generation and imports of coal-fired power lagged in the West this year, increasing the call on natural gas-fired generation to meet electricity demand. West Coast gas prices, more than in other regions, tend to be driven by the power markets. That’s because the West Coast has (1) limited power generation fuel sources within the region (in part by design), and (2) limited — and increasingly constrained — options for importing generation fuels into the region. So it didn’t help that parts of the West were in their second or third straight drought year in 2022, and many of the Western mountain ranges experienced the lowest precipitation on record during the first quarter of 2022. Additionally, as NGI reported last week, coal deliveries for electric power have experienced delays. Congressional intervention just after Thanksgiving averted a catastrophic railroad strike, but COVID-era labor shortages in the railroad industry have slowed coal deliveries and limited utilities’ flexibility to ramp up coal-fired generation in response to the incremental demand. (While California doesn’t have any coal-fired generation capacity, it does import coal-fired power — in 2021, 9.5% of the state’s power imports came from coal-fired plants.)
Prices are high all around. Some help may be found with NMRA benefit Tiger Natural Gas. Tiger Gas does have a budget billing option that spreads your bills out more evenly, and provides a discount to NMRA members. Contact Casey Duck at 918-491-6998, ext. 215; or email her at CDuck@tigernaturalgas.com.
Related Links: Tiger Natural Gas Coverage area: https://www.nmrestaurants.org/natural-gas-savings-member-discount/
KRQE Report on Deming Gas with Symmetry: https://www.krqe.com/news/new-mexico/deming-high-utility-prices-investigated-by-state-auditor/
Gas index price snapshot by location https://www.naturalgasintel.com/data-snapshot/daily-gpi/RMTEPSJ/