Tri-City governments feel gas price crunch - Fleet managers are spending thousands of dollars more for fuel

www.timesstar.com14861249916,00.html Article Last Updated: Monday, March 17, 2003 - 2:54:13 AM PST By Erin Breznikar, STAFF WRITER

FREMONT -- Filling one car at the pump is bad enough. But when you have hundreds, the costs are unbearable.

As fuel prices rise and hundreds of city vehicles remain on the road, fleet managers in Fremont, Union City and Newark have increased gasoline spending by thousands of dollars.

"We have seen fuel go up easily 50 cents in the past year. ... This does terrible things to my budget," said Union City fleet manager Mike Klinkner, who oversees the city's 175 vehicles.

Union City's fleet consumes 140,000 gallons of diesel and unleaded gasoline annually.

Fuel costs can vary between suppliers by as little as 21/2 cents per gallon. But those small differences add up, Klinkner said.

Wholesale gasoline prices vary according to the published Oil Pricing Information Sheet (OPIS). Cities typically sign a contract for one lump sum, estimating their yearly fuel costs for police, fire, maintenance and other city vehicles.

But as costs increase, cities are forced to make up the additional expense to the petroleum companies. With the dramatic rise in gasoline prices in recent weeks, new expenses are dumped on already cash-strapped budgets.

With 607 vehicles, the city of Fremont uses nearly 250,000 gallons of unleaded fuel and75,000 gallons of diesel each year. "We are certainly concerned that we have enough funding to maintain the fleet," said Tony Vargas, fleet superintendent. "(City departments) are looking at the vehicles they have and determining what's absolutely necessary."

A recent estimate obtained by the city of Newark put unleaded gas prices 30 cents per gallon higher since its last purchase, in February. The price increased nearly 50 cents per gallon since December.

... curtailing trips, carpooling to better utilize the vehicles they have."

In 2002, the city's contract for gas was $311,152, a figure based on annual estimated usage of vehicles -- and about $122,000 higher than the previous contract, in 1998, when fuel was purchased for a slightly smaller fleet.

Fremont's contracts typically are for one year, with three one-year options to extend the purchase, making it impossible to shop around for cheaper pricing and more favorable terms once the contract is signed.

With layoffs and $22 million in budget cuts in store for the city, skyrocketing prices could lead to further reductions.

"We may look at reducing the size of the fleet," Vargas said. "There have been some staffing cuts so we can reduce the number of vehicles required."

According to analysts, increasing fears of war with Iraq and a general strike in Venezuela, which pushed down production, have added to the price increase.

Gas prices have increased faster throughout the Bay Area than in much of the state and nation. The skyrocketing cost of gas is one more thing for cities across the state to worry about as Gov. Gray Davis hands down local funding cuts, according to the League of California Cities, a statewide association for city officials.

"Cities are really concerned about the state budget and are concerned if they are going to lose funds," said Megan Taylor, a spokeswoman for the League of California Cities. "In addition, cities are losing tax revenues from falling hotel and sales tax. The third part of the concern is rising fuel prices."

In the meantime, cities will continue to monitor vehicle use and promote sensible driving.

"It's similar to how we address energy saving, " said Dennis Jones, Newark's Public Works Director, "do all of the little things you can to help add up to try to conserve."