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ALBUQUERQUE, N.M. — New Mexico consumers will benefit from low gas prices as they light their furnaces for winter this year.

That’s been the trend for five years straight, thanks to the country’s boom in natural gas production. Since 2009, domestic oversupply has kept heating bills in New Mexico at their lowest levels since the turn of the century, notwithstanding short-term price spikes from winter storms or unforeseen problems in distribution.

Those trends seem to be holding steady again this season, said New Mexico Gas Co. spokeswoman Teala Kail.

“The good news is natural gas prices remain stable,” Kail said. “Ultimately, a customer’s bill depends on the weather and how much gas is used. But prices at the start of this winter are about the same as they were last year.”

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Seasonal swings

Overall, the annual average price for natural gas did climb higher this year to about 52 cents per therm, up from an annual average of 44 cents in 2013. That’s because of extreme weather last winter, when an arctic blast froze the Midwest and Northeast. The “polar vortex” had less effect in New Mexico, but overall it cut into domestic supplies and helped drive up prices in later months.

But since the summer, prices for New Mexico Gas Co. customers have fallen significantly, dropping to 45 cents per therm this month , just as homeowners begin to crank up the heat. And the company projects the price will drop to 44 cents in December.

The average residential bill for this month will be about $51.28, assuming a household consumes 51 therms of natural gas, Kail said. That’s about six cents higher than November 2013.

Average residential bills will be about double that amount in December, and a little higher still in January, as winter cold sets in and consumers use a lot more gas.

The price per therm could climb slightly during the coldest months in early 2015, since this winter is expected to be a little cooler than the last few seasons in New Mexico, said Gary Murray, manager for New Mexico Gas Co. supply and system planning.

“This winter is expected to be a few degrees, on average per day, colder than last winter,” Murray said. “That could mean customers will consume more gas to stay warm, which would drive up bills.”

Healthy supplies

But overall, domestic supplies remain robust, which should keep price fluctuation to a minimum, said Ed Kacer, gas company vice president for operations and engineering.

That’s in spite of a marked slowdown last year in production growth. Output nationwide climbed just 1.2 percent in 2013, to 25.6 trillion cubic feet, according to the U.S. Energy Information Administration. That compares to annual growth rates of 3 to 7 percent during each of the previous seven years.

Nevertheless, annual output overall remains at its highest level in U.S. history, with total domestic production up by nearly 36 percent since 2005.

Abundant supply has allowed distributors to restock storage tanks that were depleted by the arctic storm last winter.

“There was concern about whether they could refill all storage after last year’s bitter cold, but we’ve seen robust injections into storage across the country, which should assure relatively stable prices through the winter,” Kacer said.

New Mexico Gas Co. customers also benefit from proximity to the San Juan Basin in the Four Corners and to the Permian Basin in southeast New Mexico and West Texas. All the gas distributed in New Mexico by the company comes from those two basins.

“Transportation costs for getting natural gas from production areas to customers is lower than in other places, and that benefits consumers,” Murray said.

Consumers pay the same price for the gas they consume as the company pays to wholesalers, with a slight premium added on to pay for transmission and storage costs. By law, the company simply passes on the price of fuel to customers. It earns profits by charging for delivery services.

About 70 percent of the company’s gas supplies are based on long-term contracts, which also benefits New Mexico consumers by assuring long-term price stability independent of short-term ups and downs in the market, said gas acquisition manager Josh Tilbury.

“We have long-term contracts of anywhere from one to seven years out for about 70 percent of supplies,” Tilbury said. “The other 30 percent comes from supply contracts that we put out to bid in summer time for the upcoming winter.”

Upward price pressures

In a few years, natural gas prices will likely begin to climb again, largely because the energy industry is under pressure to phase out coal-generated electricity, and to a lesser extent nuclear power plants. Utilities are expected to replace much of that with natural gas generation, said Daniel Fine, associate director of the New Mexico Center for Energy Policy at the Mexico Institute of Mining and Technology. In addition, producers are also likely to begin exporting liquid natural gas in the near future, which could add upward pressure on prices.

“There is still an oversupply of natural gas for now, but in a couple of years that could change,” said Fine, who was recently appointed project leader for New Mexico state energy policy.

Even so, natural gas prices aren’t expected to return to pre-boom levels anytime soon. In the mid-2000s, producers were receiving at times more than $10 per 1,000 cubic feet, which drove consumer prices in New Mexico to 88 cents per therm in 2008, or more than twice today’s retail price.

Fine projects producer prices could climb above $5 per 1,000 cubic feet in a couple of years.