MU, Columbia departments prepared for rising gas prices

Strategic budgeting and bulk buying have left the groups in good financial shape.
Thursday, April 8, 2004 | 12:00 a.m. CDT; updated 9:30 a.m. CDT, Saturday, June 28, 2008

Wise budgeting and buying in bulk has saved the city government, emergency services and MU from negative effects of recent increases in gasoline prices.

Local prices for regular gasoline reached as high as $1.66 per gallon in recent weeks, which was an increase of 7.1 percent in a one-month period.

Price spikes seem like they could be catastrophic for the government and university departments that buy hundreds of thousands of gallons of gasoline each year.

But they have avoided that, in part due to prudent financial budgeting by the departments, which try to estimate their budgets in advance.

Capt. Brian Weimer of the Columbia Police Department says the department “looks back at what it’s like the previous year, then we add a small percentage to it.”

Lowell Patterson, the director of Columbia’s Public Works Department, says the department’s budget has held up well. “We look at the average and market prices and we anticipate trends,” Patterson says. “Then we budget conservatively.”

The Public Works Department is the city’s main supplier of fuel to other departments. It services more than 560 vehicles and other pieces of equipment. Patterson says the department expects to sell 280,000 gallons of gasoline and 425,000 gallons of diesel fuel to the various departments this year.

The department buys its fuel in bulk, hence its cheaper price — $1.18 per gallon. Its current budget estimate is $1.50 per gallon. “If we go through the year without exceeding this amount, we can carry over the money to next year,” Patterson says.

For divisions like the University Auto Leasing department that could be affected by fuel price fluctuations, money is transferred from each department to campus facilities for the utility costs of the leased cars.

Two of the biggest departments in Columbia — the Public Works Department and the Water and Light Department — also say that the increasing prices will not affect the departments’ budgets.

The police and fire departments — both with large fleets of vehicles — are also not worried about the increase in gasoline prices.

Lt. Amy Barrett said the Fire Department has less to worry about because its trucks run on diesel fuel.

The cost of diesel — at $1.55 per gallon — is cheaper than unleaded gasoline. However, the price of diesel has also increased by about 4.7 percent since six weeks ago, when it cost $1.48 per gallon.

However, the federal Energy Information Administration predicts the nationwide monthly average pump price will peak at about $1.83 per gallon this spring, then reach an average of $1.74 per gallon throughout the summer months.

“This would be a record in nominal dollar terms and the highest inflation-adjusted summer average since 1985,” the EIA said in its monthly supply and demand report.

Organizations might then have to reshuffle their budgets to make up for this increase. This means that if their estimates for gasoline costs fall short, they might have to dip into funds reserved for other purposes.

Windsor says the Water and Light Department “might have to reallocate some money from other areas.”

“If it runs out, the funds will have to be from somewhere else, from another area where there’s still funding left,” Weimer says. “We’ll just have to look at the time.”

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