The time and effort required to complete a full review of an organization’s fuel operation can often appear to be a daunting task. However, this type of review can result in significant cost and performance improvements if an agency can commit to finishing it.
In 2016, this was the situation the Pasco County, Fla., Fleet Management Department found itself in. With a 100% new senior leadership team in place, department-wide operational reviews were needed and the fuel operation was selected as the first.
Despite taking four months to complete and with updates still ongoing, the review was well worth the effort as the Pasco fleet team was able to improve service while lowering the department’s annual total operating and capital costs by $200,000. The improvements and lessons learned by the team’s operational review can be summarized into seven concepts and principles.
1. Verify the need/cost of having an internal fuel operation.
Agencies should consider the impacts of outsourcing as one of their cost management techniques, as well as looking for best practices from vendors. Although Pasco County’s location on the Gulf Coast of Florida requires it to keep an emergency supply of fuel, Pasco County still analyzed the cost of the operation.
The cost review of the operation indicated the additional cost of maintaining the fuel operation was originally $450K more than 100% outsourcing via credit cards at retail vendors (now $250K more). Had Pasco County been located in other portions of the country, a move to a 100% or 90%+ outsourced fuel operation might have been made.
2. Consider the type of emergency you are preparing for (if any), and how that affects your support planning and requirements.
This will vary widely from location to location. Pasco County emergency scenarios include winter/spring wildfires as well as hurricanes. However, the hurricane event was the determinant of the emergency fuel storage requirement. Hurricane support planning allows some flexibility, as it generally gives the opportunity for agencies to reach 90% or more of fuel tank capacity prior to storm arrival.
Other agencies such as California have fires and earthquakes as primary disaster events. This can be more difficult for fuel planning, as both of these events occur with little or no warning. Agencies may need to implement practices where 50% of fuel tank capacity is used as a re-order point and as disaster planning starting levels for their fuel calculations. That is, when the disaster occurs, the storage calculation will assume the tanks are only 50%-60% full. This will likely require larger fuel tanks to guarantee the same amount of available fuel for the agencies.
3. Don’t use your existing infrastructure and storage capacity to “back” into an emergency fuel plan.
Historical use is the best way to forecast future requirements. However, not many agencies have experienced a catastrophic emergency event that would provide this data. Agencies should use any and all means to make the best forecast they can to include meeting with customer departments to assist with forecasting. Meetings should include the Emergency Operations Team that will confirm what the expectations are for projecting duration without resupply as well as assisting with planning for additional fuel requirements from other local and federal agencies. Do not simply develop a plan to allocate your existing fuel capability until depleted.
After spending several weeks using some fuel estimating tools and pre-Hurricane Irma usage data, the Pasco fleet team calculated the county fuel requirements. The result was a diesel fuel requirement close to existing capacity of 110,000 gallons and 85,000 gallons of unleaded, which indicated a 35,000-gallon excess. Adjustments to capital plans resulted in a savings of $20,000 annually.
4. Establish, update, and review agreements with other agencies.
Other municipalities and agencies can help reduce redundancy in emergency and operating scenarios. Previously, emergency fuel plans and calculations for Pasco County were based on its own infrastructure. With the establishment of an inter-local agreement (ILA) with the Pasco County School Board in FY 2019, access to the fuel sites operated by the Pasco County School Board became an option. The school board managed the same number of fuel sites as the county and had about 60% of the county’s storage capacity. Currently, Pasco County and the board are in the process of adjusting the ILA to allow the county to retrofit the school board’s fueling sites with emergency generators. This capability is estimated to cost $200,000 up front, but will save the county approximately $1M in future capital costs, as the existing county fuel tanks are moved from below- to above-ground tanks and less storage will be required.
Cities, counties, school boards, transit operations, state road yards, and federal agencies are just some of the opportunities the local government agency may find operating in their area that can improve emergency support capabilities.
5. Review your fuel delivery mechanisms and capacity for daily and emergency operations.
Having the proper fuel amounts in your tanks does not guarantee you can get it where you need it when you want it. Although Pasco County had sufficient diesel capacity to support the five- day emergency event the emergency services team required, the fleet team realized the delivery requirements to pumping stations, building generators, and equipment operating locations could potentially overwhelm mobile fuel delivery capacity. It needed a total review of how to deliver fuel within the county.
The resolution to this issue had several key components:
● Increasing customer internal capabilities. Historically, the Pasco fleet team had provided a significant amount of mobile fueling services to its customers in the Utilities, Public Works, and Parks departments. This created a scenario where agency departments were 100% dependent on the Fleet Department for regular operations that would later be competing with emergency operations for support in a disaster. It was critical to increase fleet customer agencies’ fueling capacities. This was accomplished by using two strategies:
◗ Working with customers to identify remote locations where diesel was required in small quantities — such that a 500-gallon tank would be sufficient to support 80% or more of regular operations.
◗ Retro-fitting ½- to 1-ton “field” trucks with 99-gallon diesel tanks to handle some of the routine fueling needs of field operations. The 99-gallon truck tanks are a standard for supporting equipment operations in many agencies, since they do not require any special licensing or certifications to transport.
By increasing customer capabilities, Pasco County was able to reduce the daily and emergency fueling requirements of the mobile team by 40%. This resulted in annual savings for the county of more than $50,000, and it’s projecting to add a capacity of 2,500 gallons to the mobile fueling capabilities of the county when the retrofits are complete. These savings included the purchase and installation costs of the 500- and 100-gallon fuel tanks.
● Using federal disaster support contracts. Post-hurricane support has changed drastically since Hurricane Katrina in 2005. Multiple federal and state contracts exist for post-hurricane fuel support, and most are able to be on-site within 48 hours of last hurricane conditions. Although a full-size tandem tanker trailer set-up may not be needed, more mobile fuel trucks in the 1,000- to 3,000-gallon size may be more beneficial. These trucks are ideal to help move existing fuel to where it is needed. The Pasco fleet team was able to reserve such a truck in preparation for Hurricane Dorian in 2019 (thankfully unneeded due to an early right turn).
● Updating facility generator emergency practices and policies. With 70 county buildings supported with emergency generators, Pasco County was in excellent shape for initial post-disaster operations. However, these generators would require significant mobile fueling support post-storm. The long-term solution to this issue was to implement procedures for new and replacement emergency generators to have a three- to five-day fuel supply beginning with generators replaced in 2020. Existing generators would be retrofitted on a case-by-case basis. In the short-term, the buildings were prioritized for fueling by the Facilities Department when refueling assets were scarce.
6. Understand the impact of capital cost for best value.
Ensuring local taxpayers are getting the most efficient use of their money is critical. Most agencies have little difficulty determining the best location for their fuel infrastructure, but may have difficulty determining the most cost-effective tank sizes to accommodate their emergency or operating tank size.
The balance between fuel delivery charges and capital cost with increased tank size needs to be considered in this calculation. Bulk fuel purchases typically have upcharges of $0.03/gal or more to encourage full load deliveries by the vendor (usually 7,000 gallons or more). If an agency were to install 3,000-gallon unleaded and diesel tanks that could not take a full load, had 50,000 gallons annually of throughput, and had additional $0.04/gal charge for less-than-full deliveries, it would incur $2,000 of additional fuel/delivery costs annually. Based on a 20-year life of a tank, this could easily offset the cost of a larger fuel tank that could accommodate a full load and provide additional emergency storage if needed. These types of calculations should be considered when determining tank size.
7. Supplement with external support under contract.
This principle follows the adage of not staffing to your maximum load, but rather closer to your mean load. Like most fleet management activities, 100% insourced or outsourced is often not the best answer. Agencies should consider the possibility of providing access to third-party credit cards for departments that would be served better in some cases by acquiring fuel from private vendors. Additionally, fleet management agencies should evaluate their fuel maintenance and service activities versus outside vendors and look to supplement or outsource their own activities if it’s cost effective to do so.