News

Pain in the gas prices is spreading

By ERICA HALL

The Mirror

Several vehicle-dependent agencies are feeling the unexpected rise in gas prices in their bottom lines, but most admit there's little they can do now to offset the costs of driving around on official business.

The city of Federal Way, which owns about 100 vehicles used in a variety of departments, including public safety, was stuck last year with a $45,000 gas budget deficit when gas prices unexpectedly climbed to more than $50 a barrel.

It's going to be worse this year.

Oil prices closed at $54.77 on the New York Mercantile Exchange Wednesday afternoon, up 18 cents a barrel, and industry experts expect crude oil could hit a record $60 a barrel this year.

Last Thursday, regular unleaded gas in the Seattle area cost about $2.12 a gallon, up a penny from the day before, according to AAA's daily fuel gauge report. Last month, it cost about $1.89 a gallon, up from $1.84 last year.

During the same time in the Tacoma area, regular unleaded cost $2.04 a gallon, up two cents from the day before. Last month it was $1.81 and last year it was about $1.79 a gallon.

"In our budget, we did increase our assumption on the price, but at this time, it's much higher than we assumed," city finance director Iwen Wang said. If gas prices continue the way they're going, she said the city could end up somewhere between $20,000 and $50,000 short.

If that's the case, the city will most likely use money from the City Manager's contingency fund, which is available for unexpected expenses. Ultimately, that's about all the recourse city officials have for the spike in fuel costs.

"Unfortunately, there's not a whole lot of choice we have," Wang said. City officials could look at long-term options, like switching to more fuel efficient vehicles, she said, but

until then the city is stuck using the vehicles it has.

The cost of fuel even has an affect on the bottom line for public works projects. Crude oil is used in the production of asphalt, which the city regularly lays over sections of road every year as part of the ongoing asphalt overlay project.

The Federal Way City Council will vote March 15 to award the 2005 asphalt overlay project to Lakeside Industries for $1.45 million. The project was initially anticipated to cost $1.75 million.

Higher gas prices make it more expensive to run construction equipment, like backhoes and earth movers. The rise in diesel prices also is having a negative affect on local transit agencies and the trucking industry.

According to the daily fuel gauge report, diesel fuel cost an average of $2.73 a gallon across Washington. That's up 50 cents a gallon from the $2.23 reported a month ago, and almost 84 cents a gallon from $1.89 last year.

In the Seattle area, diesel cost about $2.72 a gallon, up from $2.24 a gallon last month and $1.91 a year ago. In the Tacoma area, diesel was about $2.73 a gallon, up from $2.20 a month ago and $1.91 last year.

The rise has hit Sound Transit pretty hard, spokesman Lee Somerstein said. With the exception of the clean buses, which run on natural gas, most of Sound Transit's express buses use diesel.

A few months ago, the Sound Transit board agreed to increase fares to help off-set increases in costs. As it is, fares collected only cover about 20 percent of the cost of providing bus service, and fare increases are intended only to shrink the ratio of costs subsidized by Sound Transit to fares paid by riders.

Sound Transit hasn't had to ask for any budget adjustments or allocations to offset fuel costs since increasing fares, Somerstein said.

As far as ridership goes, an increase in gas prices probably wouldn't have an immediate, correlated increase in the number of people choosing to ride public transit instead, Somerstein said. "It'd take several months to trickle through our system," he said.

Jim Tutton, vice president of the Washington Trucking Associations, said the truck owners and operators his organization represents have seen the price of their fuel go up a few cents every day for the past month. "It's hitting trucking companies and owner-operators very hard," he said.

In most cases, the cost of gassing up eats away at the money a driver makes per load. Some drivers have begun negotiating an 8-12 percent fuel surcharge against the revenue of their shipments to offset rising fuel costs, but those who don't negotiate a surcharge pay the costs themselves, Tutton said. "If it continues, they'll probably start missing payments on their trucks," he said.

Higher fuel costs means a greater expense to the producer, the driver and, ultimately, to the consumer who buys the food, clothes, paper goods or products the drivers are delivering. "It all gets passed along to you and I," Tutton said.

Staff writer Erica Hall: 925-5565, ehall@fedwaymirror.com

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