DIESEL FUEL PURCHASING STRATEGIES. SEATTLE METRO FUELS MANAGEMENT SYSTEM

This manual was prepared by the energy staff of the Municipality of Metropolitan Seattle (Metro) and designed to assist transit planners and purchasing agents seeking to minimize diesel fuel costs. Two reasons given why transit agencies should review their fuel purchasing strategies are: (1) diesel fuel constitutes the greatest non-labor expense item in agency budgets, i.e., diesel fuel accounts for 8 percent of operating budgets of agencies with more than 1,000 buses; 10 percent for agencies with 250-300 buses; and 13.4 percent for agencies with fewer than 25 buses; and 2) the petroleum market has dramatically changed in the last decade, namely--the emergency of the spot market, petroleum futures market, and the worldwide glut. The objectives of this report are to suggest strategies to improve transit agency diesel fuel purchasing practices, and to provide examples of transit agencies that have saved money by using innovative fuel purchasing practices. Four activities/strategies that transit agencies can do to reduce diesel fuel costs are suggested and detailed in this report: (1) redesign diesel fuel contracts (Chapter 2); 2) purchase fuel on the spot market (Chapter 3); 3) join fuel purchasing coops (Chapter 4); and 4) use futures market as a hedge against rising fuel prices (Chapter 5). However, before deciding which procurement strategy to pursue, the report suggests that transit managers should answer the following questions How much fuel do I use? How much storage do I have? What are my purchasing objectives? What is the local diesel market like? and What are the characteristics of local diesel consumers?

• Corporate Authors:

  Municipality of Metropolitan Seattle-METRO

  821 2nd Avenue
  Seattle, WA  United States  98104

  Urban Mass Transportation Administration

  400 7th Street, SW
  Washington, DC  United States  20590
• Publication Date: 1984-8

Media Info

• Pagination: 29 p.

Subject/Index Terms

• TRT Terms: Contracts; Cooperatives; Cost control; Diesel fuels; Fuels; Prices; Procurement; Purchasing; Transit operating agencies
• Identifier Terms: Urban Mass Transportation Act
• Uncontrolled Terms: Fuel prices
• Old TRIS Terms: Umta section 4
• Subject Areas: Administration and Management; Energy; Freight Transportation; Highways; Public Transportation; Safety and Human Factors; Vehicles and Equipment; I10: Economics and Administration; I96: Vehicle Operating Costs;

Filing Info

• Accession Number: 00455073
• Record Type: Publication
• Report/Paper Numbers: UMTA-WA-03-4002-85
• Contract Numbers: UMTA-WA-03-4002
• Files: TRIS, USDOT
• Created Date: May 31 1988 12:00AM