ALBUQUERQUE (KRQE) – New Mexicans are saving money at the pump with the low gas prices, while the City of Albuquerque is currently paying more than average. That’s because the city buys its gasoline for all its cars and trucks in advance, and it’s currently paying more than local drivers.
In some places around the state, gas is less than $2 per gallon, but right now, the City of Albuquerque is paying almost a dollar more than that to fill up its fleet.
Gas prices are the lowest they’ve been in more than five years.
“Heck yeah it’s nice,” said Benny Garcia.
Currently, Albuquerque drivers are paying the least in the state. But for things like fire trucks, police cars, and the rest of its fleet, the city is currently paying nearly $1 per gallon more than local drivers, at $2.96 per gallon.
“We have a fixed cost at the price per gallon that we pay,” explained Gilbert Montaño, the Mayor’s Chief of Staff.
Montaño explained it’s part of the city’s hedge fund investment. To help with planning and budgeting, the city agrees on a gas rate about a year in advance, based on predictions in the market.
Montaño said since 2012, the city has actually done well with its investments. As a result during those years where gas was high and spiking, the city has accumulated over $2 million.
The extra money helped add more city workers, including positions at the Animal Welfare Department and BioPark.
However, since gas prices have been plummeting, over the past few months, the city has lost more than $170,000 of those gains.
“There’s good indicators and there’s good metrics that we can utilize, good resources, but no one can predict exactly what fuel is going to be on any given day,” said Montaño.
As gas prices continue to stay low, the city stands to lose more money on its bet.
“Overall if we’re going the other way, if we start getting a little bit into the red versus the black, we may want to re-evaluate,” said Montaño. He said the city’s fuel hedge program is designed to provide stability and predictability in fuel prices, while minimizing the city’s exposure to price spikes.
Montaño pointed out for the past few years, the city paid significantly less than what gas actually was at the pump.
The city agreed to pay no more than $2.75 per gallon for unleaded starting next July. If gas prices go back up like experts predict, the city will once again profit from the investment.
According to AAA, the average price per gallon in Albuquerque is currently $2.12. That’s 16 cents less than the statewide average.