ALBUQUERQUE, N.M. (KRQE) – Sitting at the corner of 4th and Aspen is a gas station that’s a little different from the ones most people fill up at.
There are no credit cards accepted and no fuel prices posted. If the prices were posted, you wouldn’t want to stop there right now anyway.
It’s a city fueling station, one of several spots where fire trucks, work trucks, police cars and other city vehicles come to fill up. Currently the city has 3,916 vehicles in its fleet, which guzzled a little more than 5.7 million gallons of fuel during the last completed budget year.
Because the city buys in bulk and has a budget to stick to, it uses what are known as hedge agreements to lock in prices for an entire budget year in advance.
“It’s different than the normal everyday consumer who owns a vehicle,” said Gilbert Montano, Mayor Richard J. Berry’s chief of staff.
If prices go up from there, the city saves money compared to the average consumer. If the prices go down from there, it’s spending more than everyone else.
This current budget year, which started in July 2015, that move didn’t work so well compared to prices customers saw at the pump. The city locked in its rate for FY 16 at $2.77 a gallon for unleaded and $2.84 a gallon for diesel after taxes. That ended up being, at times, more than a dollar a gallon more than what customers were seeing as fuel prices plummeted.
The city is about to catch up with those low prices. Starting in July, the city will have a new yearlong hedge agreement that drops prices to, including taxes, $1.63 a gallon for unleaded and $1.47 a gallon for diesel.
“It created about $1.4 million in savings as we’re budgeting this year,” Montano said.
While finding savings through hedging can be valuable, Montano says the city is doing it more to create certainty, knowing what the fuel bill will be in advance.
“We know in the beginning of the year we’re going to spend this amount, we know how many gallons for the most part we’re going to use in a given year,” Montano said. “This is a tool so we can budget appropriately.”