Government Fleet Top News

Local Governments are Frustrated Over Gas Prices

May 18, 2004

RICHMOND, VA –- Gasoline prices are taking a bigger bite out of household finances and gnawing at local government budgets as well, reported the Times-Dispatch newspaper.In the past four months, the governments of metro Richmond and surrounding counties have seen gas prices escalate by about 30 percent, compared to an increase of about 23 percent for consumers. Diesel fuel, while on the rise, has increased at a lower rate.The increase has forced government departments that use gas-powered vehicles, such as police and the assessor's office, to make tough decisions about how to stretch their budgets to cover the escalating cost in these last few months of the fiscal year.For local governments, that means employing gas-saving measures such carpooling and consolidating trips.For residents, gas-saving measures could mean money previously earmarked to improve local police departments' technology will now go into patrol car gas tanks.The average driver purchases gas by pulling up to the pump and paying. When a local government purchases gas, it may buy thousands of gallons for thousands of cars; that takes more than sliding in a debit card and waiting for the prompt to lift the nozzle and pump.This is how it works for localities: Henrico, Chesterfield, and Hanover counties and the town of Ashland have a collective contract to buy fuel from PM Terminals. Richmond purchases its gasoline in bulk from James River Petroleum. No taxes are charged. To pay for maintaining fleets of individual departments, the localities charge a mark-up to the departments. The bulk purchase and tax exemption make the cost per gallon lower than retail. However, as with retail sales when gas prices skyrocket, departments can find themselves paying a lot more than they anticipated.Last week, the average gas price for metro localities was about $1.34, compared with $1.04 at this time last year.With about two months left in this fiscal year and gasoline prices steadily increasing, local officials are monitoring budgets closely.

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