Volusia County will rely on more than one fuel supplier

By Al Everson
BEACON STAFF WRITER

posted Jun 23, 2009 - 2:28:17pm

To lessen the chance of running low on fuel during emergencies and to save money, Volusia County will rely on more than one fuel supplier for the next year.

The County Council recently chose three companies to supply $8.7 million in fuel for its cars, trucks, buses, motorcycles and off-road equipment, such as bulldozers and graders.

County government uses about 2.2 million gallons of motor fuel per year, and the Votran mass-transit system uses approximately 1 million gallons. Besides gasoline, the county buys diesel and biodiesel.

Biodiesel is a blend of conventional petroleum-based diesel and diesel from alternative sources, such as soybeans.

Nine companies responded to the county's request for bids from fuel suppliers.

County staffers recommended the three lowest bidders: Mansfield Oil Co. of Gainesville, Ga., Glover Oil Co. of Melbourne, and Watkins Oil Co. of Titusville.

The purchasing agreement does not lock in prices, but allows the county and its partners to buy fuel at generally lower prices than other volume users may pay.

"We have two indexes we can buy off of," explained George Baker, the county's director of Central Services and Fleet Management. "One is OPIS Low, and the other is OPIS Average."

OPIS, the Oil Price Information Service, is a third-party pricing index the county has been using for the past five years. A county memorandum notes, "Many consider it the world's most widely accepted fuel price benchmark for supply contracts."

Baker told the County Council fuel prices are changing. Sometimes those changes can be rather dramatic from hour to hour, as anyone who follows the commodities markets can attest.

Baker said the county typically buys fuel at 30 cents per gallon below retail.

The winning bidders were the firms that offered the smallest profit margins over the prices they pay for fuel

"This is a markup above the OPIS index," Baker said.

Like service stations, the county relies on a steady flow of fuel into its storage tanks.

"We're buying 8,000 gallons at a time," Baker said.

To achieve greater savings, the county formed a purchasing consortium that includes the School Board and the cities of Daytona Beach, South Daytona, New Smyrna Beach and Port Orange. Flagler County also joined.

"This helps us with economy of scale," Baker said. "All of us working together — we're going to save about $200,000 a year."

Flagler County, he said, will save about $100,000.

While the county and the local governments do not have to pay federal and local taxes on each gallon of fuel, they must pay state taxes, which add up to 24 cents per gallon. The taxes are not levied on fuel used in vehicles that do not travel on public roadways.

"We're buying off-road diesel," Baker said.

The off-road fuel is used in vehicles at county facilities such as the Tomoka Landfill.

By not having to pay taxes for on-road uses, the county saves an additional $80,000.

The diesel designated for off-road uses is colored with red dye to deter anyone from using off-road fuel on the road. The diversion of off-road fuel for on-road uses is a violation of county policy and state law.

— al@beacononlinenews.com

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