Two days after narrowly approving a $170.9 million that officials said left them with little extra to deal with emergencies, they got some bad news.
The bids for diesel fuel were opened Wednesday and came in almost 40 percent higher than the city had anticipated, which means an additional $350,000 more than the budget anticipated will likely be needed to keep Bristol’s trucks on the move.
Several of the Board of Finance members who favored a larger property tax hike had urged colleagues to pump up the contingency fund so that City Hall could more easily handle unexpected costs.
But their efforts fell short in the face of the majority’s preference for holding down the property tax increase.
Now it appears that the pinch may be more than anyone could have guessed, with more than a third of the money set aside to deal with a year’s worth of emergencies possibly required to pay fuel bills that came in higher than anticipated.
The city’s purchasing office reported that Buckley Energy offered the cheapest price for diesel at $4.02 a gallon – lower than people will find at the pump, but much higher than the $2.90 cost the budget counted on.
That means every gallon of diesel the city uses during the fiscal year that starts July 1 will burn through $1.12 more than the budget has in it.
Mayor Art Ward took immediate steps to try to lessen the crunch.
He told department heads in an email Wednesday to submit “suggested/real means of immediately initiating/implementing conservation methods in order to lessen the tremendous energy and monetary burdens on all of us.”
He asked them to submit their ideas as soon as possible.
It isn’t clear why the budget used a $2.90-per-gallon figure for diesel costs since the price of diesel fuel has been over $4 a gallon at the pump for more than two months.
The U.S. Energy Information Agency says that while diesel fuel was cheaper than regular gasoline for many years, it’s been higher than gasoline since September 2004.
The reason, it says, is “high worldwide demand for diesel fuel and other distillate fuel oils, especially in Europe, China, India and the United States, and a tight global refining capacity available to meet demand.”
In addition, the agency reports, “The transition to lower-sulfur diesel fuels in the United States is affecting diesel fuel production and distribution costs.”
Earlier version of this post:
The soaring cost of diesel fuel has already set up a situation where the city will need $350,000 more next fiscal year than the budget passed Monday provides for.
The pinch on the already depleted contingency fund just got a lot worse.
Here's what the mayor wrote to department heads this afternoon:
FROM: MAYOR ARTHUR J. WARD
Please read the below email from the City's Purchasing Department. I am requesting that all departments submit suggested/real means of immediately initiating/implementing conservation methods in order to lessen the tremendous energy and monetary burdens on all of us. Please have these submissions in writing to my office as soon as possible.
If you have any questions, feel free to contact the Mayor's office.
Mayor Ward, I opened the bid results today for diesel and we are awarding to Buckley Energy at a cost of $4.0158 per gallon. The economic forecast estimate was $2.90 per gallon, a difference of $1.1158 per gallon. I spoke with the Assistant Comptroller and she determined that $350,000.00 additional dollars will be needed for diesel fuel costs for FY 2009. Let me know if you need any additional information.
Copyright 2008. All rights reserved.
Contact Steve Collins at email@example.com