Fuel Management

Proven Strategies Reduce Fuel Spend

March 2008, Government Fleet - Cover Story

by Grace Lauron - Also by this author

When battling rising fuel costs, there isn’t one specific method of cutting back on fuel spend. However, GF caught up with several public sector fleets to discover their particular strategies. Here are methods that have proven helpful for these fleets.

Go Green

Not only is going green good for the environment, it’s also proven a popular approach to cutting back on fuel costs. From biodiesel and vegetable oil to hybrid and electric vehicles, these fleets have managed to save money on fuel, while reducing greenhouse gas emissions.

Alt-fuels are a major part of the City of Colorado Springs, Colo., fuel program. In the past three years, fleet customers have used more than 1.25 million gallons of biodiesel. According to Fleet Finance Manager Nick Kittle, more than 50 percent of the city fleet uses biofuels. "We have used more than 1.5 million gallons of biodiesel since 2003 and saved $1.226 million through fuel futures since 2005," Kittle said.

Green efforts in Culver City, Calif.’s fleet save $425,000 in annual fuel costs. Since 1998 the fleet has been using compressed natural gas (CNG), beginning with the introduction of 20 transit buses to its 600-vehicle fleet.

According to Fleet Manager Paul Condran, CNG is Culver City’s alternative fuel of choice. "We are saving approximately $425,000 annually in reduced diesel costs. One-hundred percent of our transit system is powered by clean-burning CNG," Condran said. Public Works and general-use vehicles also use CNG. The fleet also helped develop the first manufacturer specifications for a CNG-powered 41,000-lb. sewer truck, rear loader sanitation truck, and street light repair truck. The fleet has just completed the expansion of its existing CNG compression station to properly handle the growing number of fleet equipment operating on CNG.

The City of Fort Wayne, Ind., operates a fleet of 1,652 vehicles, which include sedans, vans, SUVs, pickups, light- to heavy-duty trucks, fire trucks, heavy construction and snow removal equipment, and mowers. On top of reducing emissions by 50 percent, switching to hybrid, E-85, and B-20-powered vehicles has also saved the fleet a total of $13,256 since 2005 (based on $2.12/gallon).

At the State of Illinois Central Management Services, State Fleet Manager Barb Bonansinga operates a fleet of 12,200 units, more than 5,000 (41 percent) of which are biofuel-ready vehicles, including four first-ever Ford E-85 hybrids. Alt-fuels have been used since 1992, hybrids since 2005. Alt-fuel consumption is now 25 percent, with E-85 consumption doubled to 300,000 gallons and biodiesel use now at 2 million gallons. The fleet has acquired 42 hybrids averaging 30-percent improved fuel efficiency over conventional counterparts. Use of the fleet’s more than 2,356 E-85 vehicles has reduced CO2 emissions by an estimated 20 percent. Projected savings in fuel efficiency is approximately $24,300 annually.

In 2006, Sam K. Houston Jr., division chief for City of Jacksonville, Fla.’s fleet management division, began building a biodiesel plant with capacity to produce 2,000 gallons of fuel each week. "When fuel was $1 a gallon, this wouldn’t have been cost-effective," said Houston. That year, however, his more-than 5,000-unit fleet ran up a fuel bill of $15 million. The less expensive, homemade blend saves about $150,000 annually. "The cost of processing a gallon of biodiesel is about 70 cents," Houston estimates.

King County, Wash., began purchasing hybrid cars in 2001 and currently has 167 in its fleet. Hybrid sedans average 44 mpg, versus previous 24-mpg vehicles. Annual savings from the hybrid fleet is $95,000.

King County also operates CNG Honda Civics, which can increase fuel efficiency by about 45 percent compared to the vehicles they replaced. The County has one plug-in hybrid-electric vehicle (PHEV), with another four scheduled for delivery in March. This will allow the county to substitute low-cost electricity from the grid for high-cost petroleum. The cost-per-equivalent gallon using electricity is about 45 cents per gallon, compared with the cost of gasoline at $2.85 per gallon.

According to Fleet Manager J.D. Schulte, the City of Moline, Ill., currently has 28 units that operate on E-85, with three hybrids scheduled for purchase this year. In 2007, the 28 units used more than 7,200 gallons of E-85 fuel and the average cost paid by the City was $1.96 per gallon. The average price paid for a gallon of 87 octane unleaded during the same period was more than $2.60 per gallon, making E-85 use the more cost-effective decision, even factoring in the 16-percent loss in fuel economy. The City also benefited from an Illinois rebate program that reimbursed $340 for each flex-fuel vehicle (FFV) that traveled more than 5,000 miles in 2007. The City’s 2007 rebates should exceed $8,000. The City is adding another 20 FFV units to the fleet this year.

The City of Moline’s truck and construction fleet operates exclusively on B-20 and has used more than 150,000 gallons since April 2006. Illinois also offers rebate programs for the use of B-20 blends or greater, reimbursing agencies qualified for any incremental cost difference between biodiesel and diesel fuel during the year. In 2007, B-20 was actually lower in cost, on average, than diesel fuel, so the savings was realized by the purchase of the fuel rather than the rebates.

The City of Wilmington, Del., cut $185,000 in acquisition costs by reducing fleet size by 11 units and adding two hybrids.

The City of Inglewood, Calif., has addressed various areas within the fleet to reduce cost to the taxpayer. Run by Fleet Manager Rick Longobart, in 2004 the City adopted a six-year alternative-fuel plan to replace 146 vehicles with alternative-fuel types. The City has converted and purchased more than 65 vehicles that now operate on CNG, propane, and electric and hybrid technology, and installed a CNG and propane fueling station. The City has also adopted and uses B-20 biofuel in all diesel vehicles. Only five on-road vehicles exist in the fleet that require diesel. The remaining vehicles operate on alternative energy, biofuel, or gasoline.

The City of Peoria, Ariz., is currently considering the use of CNG or LNG to power its refuse fleet, street sweepers, and other high-mileage vehicles that can use alternative fuels. Fleet Manager Warren Laing forecasts an approximate annual savings of more than $100,000 in fuel cost.

The City of Arlington, Texas, improved fuel efficiency by 20 percent with use of hybrid vehicles.

The Village of Algonquin, Ill., has substituted biodiesel with used vegetable oil to fuel its fleet vehicles. Fleet Manager Vince Olsen said the use of vegetable oil has saved the Village more than $7,000 since 2005.

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