City, county not enjoying gas price cuts

Some government agencies are paying sky-high prices for gasoline and diesel, even while many drivers marvel at a drastic dip in fuel prices during recent months.

Colorado Springs has a contract to pay $3.45 per gallon for unleaded gas and $3.34 per gallon for diesel through the end of the year. The contract is intended to cover 75 percent of the city government's fuel needs. El Paso County is paying $3.49 a gallon for gas and $3.55 for diesel under a contract that lasts through the year.

The average retail price for gas in Colorado Springs on Thursday was $1.60 per gallon, and the average for diesel was $2.66, according to figures compiled by AAA. Both are down more than $2 from the records set in July. The prices include state and federal taxes that government agencies don't pay - 40.4 cents per gallon for gas and 44.9 cents for diesel.

Contracts that lock in prices for gas and diesel are designed to guarantee a supply of fuel and guard against future increases. Prices were so high during the summer that many people grabbed at opportunities to save. Chrysler's much-advertised "Let's Refuel America Program" guaranteed $2.99 per gallon gas for three years to people who bought or leased new cars from the company. The offer ended July 31, as prices started to come down.

If Colorado Springs had bought its gas at market prices this year, it would have saved $400,000, said Fleet Manager Tom Monarco. But the city's contracts to lock in gas prices have created big savings for taxpayers in other years. Since 2005, the contracts have enabled the city to pay less-than-market prices and saved $1.26 million, Monarco said.

The city has a contract for 2009 locking its gas and diesel prices at $2.79 per gallon. That could turn out to be a bargain or a bad gamble, depending on what happens with fuel prices next year.

"Until 2009 is done, it is unclear whether these locks will be better-than-market, but the decision certainly achieves the goals of reducing risk guaranteeing supplies and creating better planning opportunities," Monarco said.

The city uses about 3.2 million gallons of gas and diesel per year.

El Paso County cited similar advantages for its fuel price contracts. The county has used about 500,000 gallons of gas and diesel this year. Its contract for diesel started in October and for gas started in July. County Public Services Director Tim Wolken said last week the county was negotiating fuel price agreements for 2009.

Other governments have steered clear of contracts to lock in a fuel price.

"We fill up at the pump," said Bob Wilson, a spokesman for the Colorado Department of Transportation.

CDOT has a few tanks at its maintenance facilities, but when those are empty they're filled at the going rate, Wilson said. The agency handles road repair, snow removal and other jobs throughout the state. It uses about 3 million gallons of gas and diesel each year.

Colorado Springs School District 11 has a contract to purchase fuel, but it doesn't lock in a price, said Transportation Director Bill Bair. The contract calls for D-11 to pay the market price for gas plus a mark-up to cover delivery, freight costs, profit, environmental surcharges and other fees, Bair said. He wouldn't divulge the amount of the mark-up.

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Gazette staff writer Pam Zubeck contributed to this report.

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Contact the writer: 636-0187 or perry.swanson@gazette.com.