Saturday, December 27, 2014


Happy new year? City, county will begin 2015 with a case of gas pain

$2.98-a-gallon price locked in before 'bottom dropped out'

Friday, December 26, 2014 - 12:01 am
While most of Fort Wayne celebrates dramatically lower fuel prices, that joy is tempered for city and county officials who may be experiencing gas pains after agreeing to buy hundreds of thousands of gallons next year at a cost that is -- for now, at least -- far above market rate.
Although government agencies often lock in prices for fuel and other commodities in advance in order to predict expenses and avoid future increases, the recent dramatic decrease in gasoline prices came only after Allen County and Fort Wayne had agreed to pay Fort Wayne-based Lassus Brothers $2.98 per gallon next year. Gas prices in Fort Wayne recently dipped below $2 per gallon for the first time in years.
"When we locked in to (that price) earlier this year, gasoline was $3.40 per gallon," city spokesman John Perlich explained about the 750,000-gallon contract. The city is also paying $2.98 per gallon this year, and despite market fluctuations he said the practice has save the city $196,000 since 2011.
County Commissioner Nelson Peters also said the price of gas was above $2.98 when Purchasing Director Robert Bolenbaugh negotiated the deal with Lassus in April. That deal is for 300,000 gallons, but the county is committed to buy only half that amount at $2.98. The rest will be at market rate, Peters said, minus the taxes government agencies do not pay.
"Nobody knew the bottom would drop out," Bolenbaugh told Allen County Council members earlier this month, adding that he consulted with traders in the petroleum "futures" market before making the deal.
The county made the deal in order to get the same price offered the city, Peters said, noting that the decision to lock in the price of 150,000 gallons and "float" the cost of the remaining 150,000 means the county will be a predictable, moderate overall cost regardless of whether prices rise or fall. In recent years the county has purchased most of its fuel at market prices after locking in contracts before 2008. Either way, Peters said, the cost differences were minimal. "I'm not one to gamble with tax dollars," he added. "This is an anomaly."
But with gas prices already $1 per gallon lower than the contract price and expected to drop even more, Sheriff Ken Fries was in no mood for explanations.
"It's tax dollars, and you shouldn't gamble with my money. It's a waste," said Fries, whose second and final term ends Dec. 31. Fries is also upset that, although Bolenbaugh negotiated the deal months ago, the Commissioners ratified it only this month.
Peters insisted the county was obligated to honor the April agreement, but Fries said city and county officials should have gone back to Lassus after prices dropped and sought a better contract. "This is a bad deal for taxpayers," Fries said.
One part of the deal should benefit both taxpayers and employees, however, Peters said. Until now, county vehicles filled up at the county service center on Clinton Street or at the north and south Highway Department barns -- a process that cost time, money and employee availability. In 2015, county vehicles will be able to fill up at any Lassus station.
"Will it be more convenient? Yes," Fries said -- but a convenience he insists is not worth the hundreds of thousands of dollars the contracts may cost taxpayers.

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