Fuel costs eating into city wallet

By Thomas Wilson
star staff
twilson@starhq.com

  As crude oil prices break records nearly each day, the Elizabethton city government faces higher gasoline prices to keep police cars, brush trucks, and fire engines rolling when needed.
  The city solicits bids each month to buy between 6,000 and 8,500 gallons of gasoline and diesel fuel to power the city's fleet of vehicles and fuel-operated machinery. Kelso Oil Company of Knoxville submitted the lowest bid for the October supply at $1.49 per gallon of gasoline and sulfur diesel fuel.
  The bid reflects an increase of 22 cents per gallon of gasoline and 26 cents per gallon of diesel fuel. The increase means the city will absorb a fuel cost increase of $3,000 over September's fuel cost.
   The city paid over $19,000 for gasoline and diesel fuel in September. The low bid price proposed by the city's Purchasing Department is more than $22,400 for October. The bids come before City Council for approval on Thursday night.
  International oil prices have been on the rise throughout 2004. The city purchased 15,500 gallons of gas and diesel fuel in November 2003 for a cost of $14,429 - a jump of $8,000 in less than one year. Funding for the fuel costs are projected to come from the fuel purchases budget. The purchases will then be charged out to various city departments, schools, and non-profit agencies as used.
  Oil industry experts point to a number of factors contributing to the petroleum price spike, including the hurricanes in the Americas, the legal and supply woes of Russia's Yukos oil company, and the continuing violence in Iraq. Ongoing violence in Iraq has undermined attempts to return the country's oil production to pre-war levels even though Iraq has been able to increase its exports to 2.5 million barrels per day.
  The Conference of OPEC members voted to raise the organization's production ceiling (excluding Iraq) by 1 million barrels per day to 27 million barrels per day beginning Nov. 1 in order to bring prices down to a more sustainable level.
  Brent crude on London's International Petroleum Exchange, the benchmark for European imports of Middle Eastern, Russian and African crude, closed at $50.66 a barrel on Monday, up 95 cents on the day, after peaking at a record $50.70. Near-month Brent is now $20 higher than at the start of the year.
  U.S. light crude hit a new high of $53.80 a barrel on Monday and settled at $53.64, up 33 cents, on the New York Mercantile Exchange.
  In late September the price of North Sea dated Brent hit $47.09 per barrel, while West Texas Intermediate crude closed at $49.90 per barrel, both all-time highs in the United Kingdom and United States, respectively. This most recent price increase was attributed to unrest in Nigeria's Niger Delta region, bringing threats of a disruption to the country's oil production.