January 12, 2009
Minnesota Governments Unite to Lock in Fuel Prices
MINNEAPOLIS - Following a year in which fuel prices reached historic highs, more than 30 metro-area cities, counties, school districts and state agencies have banded together to purchase more than 5 million gallons of fuel in 2009, in a move that will lock in lower prices and reduce their fuel bills by hundreds of thousands of dollars, according to the Minneapolis Star Tribune.
Prices in the contracts range from $1.439 for gasoline to $2.31 for premium diesel, below recent market averages in the metro area. Savings from the new contracts come at a good time for the agencies, since many will be hit with cutbacks in state aid payments.
"I'm convinced we haven't seen anything yet," Ryan Schroeder, Cottage Grove's city administrator, said of the municipality's effort to keep itself in positive budget territory given the expected decline in state aid. The new contract will save the city about $250,000 of the $600,000 it budgeted for fuel.
Local governments nationwide have been burning through their fuel budgets because of surges in oil prices the past two years. Many have turned to buying larger volumes of fuel earlier in hopes of seeing stability and savings in the next budget year. In the east metro, efforts to reduce consumption -- no-idle policies, purchasing more fuel-efficient vehicles and drawing more efficient vehicle routes -- are also in place.
The new metro-area contract guarantees that participating local governments will spend about $4.2 million for gasoline and about $5.5 million for all diesel blends. Without the contract, local governments would pay substantially more if fuel prices shoot upward again.
"It helps them with budgeting," said Jim Schwartz, a spokesman for the Minnesota Department of Administration, the agency that coordinated the bulk buy. "The price they were able to lock in should at least help people, and for sure they'll know what they'll be paying for gasoline for 2009."
Prices of fuel – purchased throughout 2009 from wholesaler Hartland Fuels in Inver Grove Heights – vary according to volume.
Minneapolis will buy the most gasoline at 831,600 gallons. Other heavy hitters include Hennepin County, the University of Minnesota and the Minnesota Department of Transportation according to the Minneapolis Star Tribune.