Aspen-area governments cash in on falling fuel prices
While many households — at least those outside of Aspen — are getting an immediate boost to their pocketbooks from lower prices at the gas pumps, the savings are more mixed for government agencies and private-sector businesses that burn mostly diesel fuel.
The Colorado Department of Transportation, which operates the snowplows on state highways, and the Roaring Fork Transportation Authority, which operates the valley’s bus system, are locked into fuel purchasing contracts that limit their gains from the recent drop in the price of diesel fuel.
Private-sector companies that have fuel as a major expense, such as garbage haulers, contend they need to see the long-term pricing trend before they can pass any potential savings to customers.
Brian Pettet, public works director for Pitkin County, is optimistic the government will save tens of thousands of dollars on fuel purchases in 2015 if current prices hold steady.
The county used 70,000 gallons of gas at a price of $2.82 per gallon through a bulk contract in 2014, Pettet said. It is currently buying gas at $1.60 per gallon for a savings of $1.22 per gallon, he said.
That would translate into a savings of $86,000 if the price holds at $1.60 per gallon throughout 2015, he said.
In 2014, the county used 57,100 gallons of diesel fuel at $3.18 per gallon. This year, it is at $2.40 per gallon for a savings of 78 cents per gallon. That translates into a possible savings of $45,000 year over year.
All vehicles in the county fleet that burn gas combined for 1,065,000 miles last year, according to Pettet. The heavy equipment, everything from snowplows and dump trucks keeping the roads clear to the snowplows clearing the Aspen-Pitkin County Airport runway, combined for 13,500 hours last year.
The fuel situation is a little good news and a little bad news for RFTA. The transit agency, which has buses that travel about 5 million miles annually, decided years ago to lock into fixed-forward price contracts, according to Chief Executive Officer Dan Blankenship. Fuel is the most volatile part of RFTA’s budget, so the agency wanted to hedge against price spikes.
The agency purchases different blends of diesel fuel in summer and winter, but the weighted average price for 2015 is $3.30 per gallon, or 18 cents lower than the 2014 contract price of $3.48.
If RFTA wasn’t locked into a contract, it would likely purchase its diesel fuel through what Blankenship called the Denver spot market. That was at $1.77 per gallon Thursday, he said, so the savings would be substantial.
“In terms of fuel cost savings — assuming the same number of gallons used — I believe that RFTA’s 2015 cost for diesel fuel will be approximately $100,000 less than it was in 2014,” Blankenship said in an email interview. “It is disappointing that RFTA won’t be able to reap a greater windfall from the unprecedented and rapid decline in fuel prices, which began falling precipitously towards the end of last year, after RFTA’s budget was finalized.
“However, it would be challenging to forecast how long the low prices will stay in effect and difficult to predict with certainty how much more RFTA might have saved if it hadn’t locked its fuel,” Blankenship continued.
RFTA is committed to a fixed price for a portion of its fuel in 2016. However, Blankenship said the agency might have to consider locking less of its fuel in at a specific price in the future.
Private-sector companies aren’t necessarily in a position to reap as good of contracts as government agencies. Rich Burkley, vice president of operations for Aspen Skiing Co., said the company has a long-term contract on diesel fuel that covers 2015. While lower fuel costs constitute a reduced expense, he said the contract was signed prior to the most drastic decrease in prices.
Don Van Devander, general manager for Mountain Roll-Offs Inc., a western Colorado trash hauler, said diesel prices haven’t fallen as drastically as what people have experienced at the gas pumps. In addition, fuel prices never dip as much in the Roaring Fork Valley as they do elsewhere in Colorado and in other states.
“Fuel prices here are the goofiest,” Van Devander said.
Fuel, which is one of the biggest expenses for his company, is purchased about every two weeks. The most recent purchase in late December was for about $3.60 per gallon, he said. While that’s an improvement over the price two years ago, his firm isn’t ready to drop the fuel surcharge included in customers’ quarterly bills.
“We’re not there yet,” Van Devander said.
Customers regularly call to inquire why they are still getting the surcharge since fuel prices have dropped, he acknowledged. He needs to see what prices go to over the next few months. If they remain low for six months, he is more likely to adjust the surcharge, he said. It is currently $25 for three months on a residential bill. That covers only about 25 percent of Mountain Roll-Off’s actual fuel expenses, he said.
Van Devander hit it on the head when he said fuel prices in the Aspen area have remained higher than most of the rest of the country.
The Shell station at Local’s Corner in Aspen charged $3.79 per gallon of regular unleaded gas Wednesday. That was the highest reported price in Colorado in the last 36 hours, according to the online service GasBuddy.com. The Conoco at Main and Monarch streets charged $3.57 per gallon. The Conoco station at the Airport Business Center was charging $3.59 per gallon.
As usual, prices drop the further downvalley a motorist travels. Prices were at about $2.60 per gallon in Basalt and El Jebel on Thursday, according to GasBuddy.com. In Carbondale, most stations charged between $2.27 to $2.32 per gallon.
The Sinclair Station at Grand Avenue and 22nd Street in Glenwood Springs continues to be the price leader at $1.97 per gallon.
GasBuddy.com reported that the national average was $2.08 and the Colorado average was $1.92 as of Thursday afternoon.
The higher prices in Aspen aren’t confined to road vehicles. Atlantic Aviation, the fixed-base operator for private aircraft at the Aspen-Pitkin County Airport, dropped its prices over the last week but remains among the highest priced in Colorado.
It cost $7.59 per gallon of low lead 100 at Aspen and $7.20 for Jet A fuel on Thursday, according to the website Nav.com. The Vail Valley Jet Center was charging $7.29 per gallon for both types of fuel. The Jet Center at Centennial Airport in Denver was charging $6.14 per gallon of low lead 100 and $3.31 per gallon for Jet A fuel.
All prices were for full service. Atlantic Aviation dropped its prices by 20 cents per gallon for low lead 100 and 9 cents for Jet A over the past week. It also gives discounts for volume purchases and to Aspen-area pilots who park their aircraft at the Aspen airport.
Fred Mosher, general manager of Atlantic Aviation’s Aspen office, said it is more costly to do business in Aspen than it is in most parts of the country, and fuel prices reflect that, as do prices for many products and services in Aspen.
“Business expenses include leases, capital expenses for state-of-the-art aircraft handling fleet equipment and the fact that Atlantic Aviation is the largest employer at the airport drives significant overhead, which is factored into aviation fuel pricing,” Mosher wrote in an email.
It’s difficult to compare Atlantic Aviation’s pricing policies with those of self-serve auto gas stations that go through a lot of gas, Mosher said.
“We maintain a sizable fuel-storage farm, and once we deplete higher-priced fuel on hand with cheaper fuel, we can pass savings along to our customers,” he said.
But it takes time to deplete the gas supply. The mountains surrounding the Aspen airport create limits for private aircraft landing and taking off.
“Historically, aircraft performance and our mountain weather limits aircraft from taking more fuel out of Aspen than they might at other airports with longer runways and at lower elevations, regardless of the price,” Mosher said. “Additionally, a practice that has gone on for years is aircraft filling their tanks with cheap fuel at their home airports before coming to Aspen and therefore needing little if any fuel while here.”
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The new ownership of The Aspen Club & Spa last week paid off more than $30 million in debts and interest owed to creditors and construction firms for work and materials related to the expansion and remodel of the property on the east side of town.