SAN FRANCISCO – The City of San Francisco has signed a new one-year fuel contract with Western States Oil for $27,800,000. This is a $2.72 million increase over the previous contract due to higher fuel prices for gasoline and diesel and because fuel expenses for the month of September 2011 were left out of the original projections. The City operates more than 6,000 vehicles and 700 pieces of equipment.

The City spent more than $24.4 million in FY 2007-2008, and more than $25.4 million in FY 2008-2009. For FY 2010-2011, the City estimates it will spend more than $27.6 million (the City doesn’t yet have data for the last two months of the period in the FY 2010-2011 contract, August and September).

According to City documents, although it’s working to reduce fuel costs via a wide range of programs and efforts, those efforts aren’t enough to combat the rising price of fuel. For example, the City has a car share program, has reduced its fleet size, has term contracts for the purchase of hybrids, encourages City employees to use public transportation when possible, and asks departments to trade in their less fuel-efficient vehicles for newer ones.

One way the City is saving money is through the purchase of red dye diesel (diesel fuel with a red pigment in it), which can only be used in non-road equipment (lawnmowers, generators, etc.). This type of diesel fuel isn’t taxed as heavily as regular diesel, so the City will see savings by purchasing this alternate type of diesel fuel for its non-road equipment. The City’s fire department and port will use this type of fuel.

By Greg Basich