Fuel spike hits LR public transit
Attack on Saudis pinches Rock Region Metro gas budget
The weekend drone strike on Saudi Arabia that cut into global oil supplies almost cost the Pulaski County transit agency more than $50,000 in higher fuel prices.
The strike rattled oil markets just as Rock Region Metro officials were getting the agency’s board to approve 12-month contracts for gasoline and diesel fuel for the period beginning Oct. 1.
At the board’s monthly meeting on Tuesday, agency officials said they were looking at a 10-cent increase in the prices for a gallon of gasoline and diesel compared to the quotes they received last week, before the drone strike at a Saudi oil processing facility and oil field cut off 5.7 million barrels a day in production — half the nation’s total output and 5% of global oil supply.
On Monday, as markets initially reacted to the strike, agency officials said prices had spiked 15 cents a gallon compared to the quotes they were receiving last week.
Given the volatility of the markets, the staff sought board approval to pay as much as $2.05 a gallon for gasoline and $2.10 for diesel should the prices rise before they could be locked in, avoiding another board vote before the existing contracts expire Sept. 30.
“At any time, it could be trending upward again,” Joe Procop, assistant director of procurement and assets for Rock Region, told the board. “It’s very volatile.”
The volatility rattled the board as well, with one member asking how long they could wait. But Charles Frazier, the agency’s director, asked the the board not
to wait.
“Let’s lock this price in and seal the deal,” Frazier said before the board voted 9-0 to approve the prices the staff sought.
By the time agency officials locked in a price for gasoline, they got a price that was significantly lower — $1.72 a gallon, compared to $1.95 at noon on Tuesday and $1.85 late last week.
The savings from Monday’s prices for gasoline were $28,980 on the 126,000 gallons of gasoline Rock Region is scheduled to purchase for the new 12-month contract.
“The rates we pulled days ago were lower, and while the prices shot up given yesterday’s global news, the prices then fell again, and we were able to capture the rates we did as soon as the board approved our contract caps in today’s meeting,” agency spokeswoman Becca Green said.
Diesel prices didn’t fall like gasoline prices did. The agency will pay $1.99 per gallon under the 12-month contract that begins Oct. 1, according to Green.
The 10-cent hike caused by the drone strike will add $38,000 to the 12-month contract for diesel. The agency is scheduled to purchase 380,000 gallons of diesel under the contract for $756,200. At $1.89, Rock Region would have paid $718,200.
Overall, the drone strike on the Saudi facilities cost the agency $9,020 for gasoline and diesel.
The prices for both diesel and gasoline Rock Region locked in for the new contracts are less expensive than what Rock Region is paying for the fuels under the contracts that expire Sept. 30. Those contracts locked in prices of $2.29 per gallon for diesel and $2.20 for gasoline.
The agency also has several buses in the regular fleet that are powered by compressed natural gas. Rock Region pays the equivalent of 90 cents per gallon for the gas.