RFTA fuel costs could top $2.5M
December 3, 2008
ASPEN ” The Roaring Fork Transportation Authority expects to spend as much as $900,000 more on fuel than it initially planned in 2008.
According to RFTA President and Chief Executive Officer Dan Blankenship, volatile fuel prices over the past few years have proved problematic when it comes to budgeting.
“Up until the past year, we were pretty well managing fuel prices,” Blankenship said. “Since hurricane Katrina, fuel prices have been very volatile. We didn’t see the major swings before that we’ve seen since then.”
RFTA budgeted $1.8 million for diesel fuel in 2008, according to Blankenship. That was the same amount RFTA spent on fuel in 2007, when $300,000 had to be added to that year’s $1.5 million budget.
In March 2008, when prices were on their way to all-time record prices, Blankenship said RFTA did a supplemental budget appropriation to increase the fuel budget to $2.3 million.
“We could see that the prices were going to increase, but we didn’t hit the high until July, so we added $500,000 to the budget,” Blankenship said.
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However, the year-end forecast isn’t looking any better as fuel prices drop. Blankenship projected RFTA’s fuel budget is more likely to come in between $2.5 million and $2.7 million, based on actual expenses through the month of October. The agency estimated the cost per gallon of fuel would end up at $3.40 per gallon for 2008.
RFTA’s 2009 budget assumes a much lower $2.78 per gallon, but RFTA is looking at a total budget of $2 million.
“It’s a little bit early to be counting our chickens,” Blankenship said. “We are gearing for it to be worse than better.”
RFTA purchases fuel at wholesale prices on what Blankenship referred to as the “spot market” ” a system in which RFTA pays the lowest available price minus a half-cent, plus transportation and miscellaneous charges. It doesn’t pay federal or state taxes on fuel.
But the lower fuel cost will benefit RFTA, if only in allowing it to stay within its initial 2009 budget without allocating additional funds toward fuel.
“The lower the fuel price, the better it is on the budget,” Blankenship said.
RFTA has also set aside $200,000 in next year’s budget to lock in a fixed-fuel contract with its distributor, for at least part of 2009, if prices remain at $2.78 per gallon or more, Blankenship said.
The fixed price focuses on the distributor’s charges for delivery, not the actual price per gallon.
“We might be able to lock in the fixed price for the year, or a significant part of it,” Blankenship said. “Then we would have certainty of meeting our budget.”
However, if the prices continue dropping, it could play to RFTA’s advantage to buy off the spot market.
“If we continue to buy off the spot market, we would reap a windfall of lower costs,” Blankenship said.