The Edmond Sun

February 8, 2013

City, schools work to minimize motor fuel costs

Mark Schlachtenhaufen
The Edmond Sun

EDMOND — Second only to depreciation, fuel is the second-largest public sector fleet expense.

With gasoline prices remaining above $3 a gallon, organizations like the City of Edmond, Edmond Public Schools and the University of Central Oklahoma are working hard to keep costs down.

On Friday, the national average price for a gallon of regular was $3.567, according to AAA’s Daily Fuel Gauge Report. A gallon of diesel was $4.019.

In Oklahoma, the current state average for a gallon of regular was $3.388. A month ago, a gallon of regular was $2.991. A year ago it was $3.270. A gallon of diesel averaged $3.813. A month ago it was $3.681. A year ago it was $3.698.

Local public prices for a “gallon” of compressed natural gas (CNG) have remained below $2.

In recent weeks, prices have been surging. From Jan. 16 through Feb. 5, the Oklahoma average for regular jumped 38 cents. The trend has been largely the result of higher crude oil prices and the “rubber-banding” of mid-continent retail gasoline prices, which fell dramatically to end the year and are now swinging back to the upside, according to AAA Oklahoma.

Bob Masterson, fleet superintendent for the City of Edmond, said the city maintains a fleet of 400-500 vehicles and pieces of equipment. Vehicles include cars for various departments, vans, trucks, the city’s transit fleet and heavy equipment. Each department pays its fair share to fund the division’s entire budget.

Three types of fuels are available to the fleet: #85 ethanol (85 percent ethanol and 15 percent gasoline), diesel fuel and unleaded gasoline. The Vehicle Maintenance Division also has budgeted for the conversion of six Citylink transit buses to CNG, a process that is well under way.

Masterson said the city budgeted $1.1 million for fuel costs in fiscal year 2012-13. From FY 2011 to FY 2012, the cost for unleaded increased 15.2 percent and the cost for diesel increased 16.6 percent. The city buys its fuel directly from a vendor, Masterson said.

When calculating costs for a given year, the city considers historical data, government information and geo-political issues, Masterson said.

City efforts to reduce downtime and improve efficiency include utilizing an in-house parts distributor, NAPA Auto Parts, which has significantly reduced vehicle downtime while waiting parts for repair. The division installs and maintains GPS hardware in the city’s fleet, which improves the efficiency of dispatching vehicles, especially for emergency calls.

Additionally, Masterson attends alternative fuel expos. The city soon will install a liquefied petroleum gas pump at its Cross Timbers Municipal Complex. When possible, employees car pool. And manufacturer maintenance guidelines are strictly followed.

“We don’t want to spend money we don’t have to,” Masterson said.

Edmond Public Schools Associate Superintendent for General Administration Bret Towne said during the 2011-12 fiscal year the district used 217,195 gallons of diesel and 52,785 gallons of unleaded. The budget was $791,000 and the district spent $827,920. It’s current price per gallon of diesel is $3.22.

Towne said the district bids the profit margin on its fuel each year and if market prices fall significantly, lock in the cost per gallon for the year. This year, it has only had a 25 cent range in costs and has not locked in the cost of fuel, Towne said.

“If fuel costs were to exceed the budget, we would utilize district contingency to make up the difference,” he said.

The University of Central Oklahoma budgets for gasoline by taking the previous years’ expense and increasing it by 2-3 percent for inflation, UCO spokeswoman Adrienne Nobles said.

UCO has 99 licensed road vehicles in its fleet. During fiscal year 2012 fuel costs were $58,127.50 on gasoline, $3,670.70 on diesel, Nobles said. The fiscal year 2013 fuel budget is $63,652.

“Our motor pool is focusing on reduction of the fleet, where it makes sense, and using electric golf carts for cross-campus transportation,” Nobles said.

Oklahoma’s economy reached a number of milestones as it showed expansion in January, State Treasurer Ken Miller said Tuesday. Miller said the record collections are a reflection of the strength of Oklahoma’s recovery and are in no way related to increased tax rates, which have been reduced in recent years.

State gross production taxes on oil and natural gas generated $58.05 million in January, a decrease of $10.72 million or 15.6 percent from last January, according to the state treasurer’s office. Compared to December reports, gross production collections were down by $2.12 million or 3.5 percent.

Between February 2012 and January 2013 oil and gas gross production tax collections brought in $717.32 million, down by $314.33 million or 30.5 percent from the previous period.

Reasons for the low collections include low natural gas prices, the state repaying oil and gas producers for deferred tax credits and the state not collecting tax on most horizontal drilling, according to the Oklahoma Policy Institute.