Buying in bulk has saved countywide governments and school districts money as gas prices rose across the country.
Servicing from places like Evergreen FS in Bloomington-Normal or Ken’s Oil Service in Livingston County comes on a monthly or yearly basis, depending on the specific needs of the government entity. Buying in bulk saved money in the long run well before gas prices spiked amid the war with Iran, but now makes an even larger difference.
Local governments
The City of Bloomington, Town of Normal and McLean County governments all need fuel throughout the year - and lots of it.
The county government deploys about 20 dump trucks, backhoes, graders, mowers and paint stripers across the 360 miles of roads it maintains across McLean County. Bloomington and Normal also use infrastructure-supporting vehicles, but also fuel emergency vehicles, water department and public works vehicles.
McLean County checks for quotes about once a month when its fuel stores are depleted. It receives quotes the same day from multiple sources, mainly FS and Ken’s, and determines based on price which one to choose to deliver another month of fuel. For June the county purchased $37,000 worth of fuel, with unleaded at $3.70 and diesel at $4.50 per gallon.
“Just two months ago we were paying around $28,000, so it's increased that much in the two month time period,” said Jerry Stokes, county engineer.
But while some of that comes from the worldwide changes in energy costs, part of the increase also comes from the natural increase in fuel prices in the summer months. Stokes said the summer months are the “busy season” for countywide road work projects.
Bloomington
The City of Bloomington has a fuel risk management system with Evergreen FS, providing fuel for the government which uses approximately 42,000 gallons of fuel per month.
“This allows us and helps protect, really, the taxpayers from the standpoint of major increases like we've seen throughout the market share over the last several months, and it helps us from a budgeting standpoint and stability-wise,” said Bloomington Mayor Dan Brady.
Bloomington currently gets unleaded at $2.38 per gallon and diesel at $3.58. That current deal lasts until renewal in October, where Brady expects the price will be higher but still at a discount.
“When you look not only at the gas prices, but how it affects everything, asphalt prices — because obviously there are petroleum-based products. So, when oil prices rise, paving and resurfacing of the roads, and the cost goes up, so it really affects everything that the city is doing,” said Brady.
Normal
In the Town of Normal, Mayor Chris Koos said the focus for savings is not so much on what price it can find as it is on fuel efficiency.
“We had a reduction in fuel purchases this last year, and we're always looking for ways of doing that,” said Koos. “We're also looking for electrifying more of our smaller fleet vehicles.”
While Koos did not offer a number for how much the town pays for gas or diesel, he said there has been about a 50% increase in fuel prices year-over-year. Usage is down 1% in that timeframe, and he said the town is aiming for even more.
Connect Transit
Ridership is up 5% for Connect Transit, but CEO Brady Lange said company research attributed that to service improvements more than the price of gas.
Connect mostly uses diesel, at $3.19 per gallon, for the buses which cover ground across the Bloomington-Normal area. Unleaded is $2.59 per gallon for the smaller vehicles Connect uses. Connect Transit contracts for fuel on an annual basis, which Lange said is the sweet spot for the company.
“If we try to issue a contract for, say, three or five years worth of fuel, we would actually pay more, because the vendors are trying to protect themselves from these increases,” said Lange.
“Looking out a year, they have often contracted for fuel for the next year, so they have already bought fuel at a lower rate, which allows them to extend that discount.”
And while car owners are not currently opting to use the bus instead in a significant way, board chair Julie Hile said it is important to highlight the savings that could come from purchasing a bus pass.
“We are always interested in sort of breaking through to people who understandably love their cars, to just get them to try us out,” said Hile.
Efforts to make Connect more attractive include improvements to online services, an upcoming switch to contactless fares and additional buses servicing key routes.
School districts
Although school is currently in summer break, Unit 5 and District 87 both still feel some effects from gas prices.
“The spike in prices there this spring was unexpected and certainly negatively impacted the budget,” said Marty Hickman, Unit 5's chief financial officer.
Because Unit 5 only has to support summer school, the summer months are an opportunity to enjoy having fewer buses running for the school district. Much of the fuel spending is on diesel for buses, but some is also spent on gasoline for some minivans.
Unit 5 does contract bulk fuel, but Hickman said not fully. In a typical year about half of the fuel the district uses will be contracted out for bulk storage. It would be purchased for short-term needs, which he said was at a lower price than if it was bought for more long-term needs. Current volatilities changed that. Much of the fuel Unit 5 is purchasing currently is at market price from Ken’s Oil Service.
“We're paying the high price right now,” said Hickman.
Unit 5 did make a bulk purchase at a time where prices had seemed like a very good deal. Yet the purchase was right before the COVID lockdowns, meaning prices dropped significantly further right after the purchase.
“Sometimes you win with that and sometimes you lose, but what we’re trying to do is get part of our budget some certainty.”
Michael Cornale is chief financial and facilities officer for District 87. He said in the previous fiscal year, the Bloomington-based district budgeted about $255,000 for fuel for buses, with which the district purchases about 40,000 to 50,000 gallons at a time. That fuel is then delivered throughout the year whenever needed.
Currently, District 87’s fuel from Ken’s Oil Service is about $2.10 per gallon, coming in at about $2 less per gallon than what it would cost if purchased today. Costs are renegotiated each time the 18,000 gallon fuel storage, located at Illinois Central School Bus, is depleted. Cornale predicted the current storage would last at least throughout the summer while less bus routes are running.
“It's a contract commodity, there just has to be some discretion associated with when, when we make the purchase in an effort to try to get the best deal,” said Cornale.
