Price of gas being felt in city's budget
June 13, 2008 · Updated 11:40 AM
By ERICA HALL
As gas prices continue to set records across the nation and in the state, Federal Way officials are growing a little concerned about the cost of keeping city vehicles running.
City finance director Iwen Wang said if fuel costs don't come down soon, the city will overspend its gasoline budget by 33 percent. The city budgeted $173,000 for gas this year, she said, but the way it's going, the gas bill will top $230,000 by the end of the year.
She said the cost of fuel has increased 25 percent from 2002-03. The city's fuel expenditures have gone up 21 percent in the same time period.
She expects the city will ask the City Council to approve a budget adjustment at the end of the year to account for the budget overruns in fuel. At the same time, she's not sure what officials will do to account for future fuel costs, since the council has told department heads to make cuts in the 2005-06 budget.
"If this continues, it's going to be difficult to hold costs down," she said.
On Thursday, gas prices in Seattle averaged $2.19 a gallon for regular unleaded and $2.17 for diesel, according to the Oil Price Information Service (OPIS), which provides daily updates on gas prices for agencies like AAA (American Automobile Association). A year ago, regular unleaded cost $1.60 a gallon and diesel cost $1.61.
In Tacoma, OPIS recorded Thursday's gas prices at $2.13 for regular unleaded and $2.14 for diesel, compared to $1.55 and $1.60 a gallon, respectively, a year ago.
The national average Thursday for regular unleaded was $1.93, compared to last year's $1.49. Diesel was $1.78, compared to $1.52 a year ago.
Deputy chief Brian Wilson said the Federal Way Police are feeling the squeeze, even though they get wholesale-priced fuel at Ernie's truck stop in Federal Way, which is a member of the Commercial Fuel Network. "We always try to get the best costs, but they are increasing," Wilson said.
Network members get fuel at the cost of a barrel and charge wholesale prices to members. Futures for sweet crude, used to produce gasoline, diesel, heating oil and jet fuel, closed Wednesday on the New York Mercantile Exchange at $37.57 a barrel, down 68 cents.
At the beginning of the year, the police department paid about $5,000 a month for gas for the marked patrol cars, undercover cars, cars for the support officers, motorcycles and transport vehicles, Wilson said. Including trailers, the department has about 90 vehicles.
More recently, the department's monthly gas expenditure has been closer to $8,000, he said.
"Even in the last two years we've seen fluctuations," Wilson said. "If these prices were to stay for a long period, that's something we'll need to factor into 2005-06."
Officers drive between 15,000 and 18,000 miles a year, though some investigative and undercover cars don't rack up as many miles. Wang said about two-thirds of the city's gas costs are related to the Police Department. The other third accounts for the rest of the city departments combined.
Public Works deputy director Ken Miller said his department feels the increase in fuel prices at almost every level, from gas prices for vehicles to the cost of construction work for street improvements and signal installations.
"We do see the results of increases in oil, gas, diesel, steel and oil-based product prices in our bids," he said. "We're seeing bids coming in over our estimates."
And the bids aren't just a few dollars higher. Some are between 15 and 20 percent more than the city anticipated in the project budget.
The increases are being felt all the way down the line, from drainage and landscaping pipes and street lights to conduit and wire. "It's kind of a a snowball," Miller said.
He doesn't expect major changes in the department's 2005-06 budget. Public Works already increased the project budgets slightly year to year to account for inflation.
Staff writer Erica Hall: 925-5565, email@example.com