01-27-2014 Council Packet - Laserfiche WebLink

Home Browse Search

� COUNCIl�M�'�TING REQUEST FOR COUNCIL ACTION �'AN 2 7 20�� DATE: January 2��0 ITEM NO: � Department Approval: Administrator Reviewed: Agenda Section: Name Jesse Struve Public Works Director/ Title Public Works Director/City Engineer City Engineer's Report Item Description: Fuel Sales Agreement List of Exhibits A- Yocum Oil Company Price program Sales Agreement—Gasoline B- Yocum Oil Company Price Program Sales Agreement-Diesel Fuel Historically fuel (gas and diesel) have been purchased on an as-needed basis. Using this method,the price of fuel varies throughout the year. This methodology can lead to large swings in fuel prices throughout any given year. In 2013 the price to purchase gasoline ranged from $2.63 - $3.90. The attached agreements will lock in a quantity of gasoline at approximately $2.65 per gallon and the diesel at approximately $3.13 /$3.25 (summer/winter blends). On average, the City paid $3.05 per gallon for gasoline in 2013. If 2014 has the same average price per gallon as 2013 the agreement would save the City approximately $13,000. Unfortunately, the cost savings is difficult to forecast since it depends on future gas prices. There is risk involved should the price of gas drop below $2.65 per gallon because then the contract will ultimately cost more than purchasing fuel on an on-going basis. The agreements will require the City to purchase at a minimum of 33,600 gallons ($89,040) of gasoline and 8,400 gallons of diesel fuel. This represents approximately 85-90% of our yearly totals. The remaining 10-15%will be purchased at the going rate at the time of purchase. It is my recommendation to accept the two price program sales agreements for gasoline and diesel fuel from Yocum Oil. COUNCIL ACTION REQUESTED: Consider a motion to enter into the price program sales agreement for gasoline and diesel fuel with Yocum Oil.