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Meeting Date: September 13, 2005

Subject/Title: Accept an Informational Report on Fueling Expenditures

Prepared by: Kerry Breen, Financial Services Manager

Submitted by: Pamela Ehler, Director of Finance and Information Services


Councilman Taylor asked if and how the City has budgeted for the escalating gas prices.

We began the budgeting process back in January 2005. In February 2005, after analyzing rising fuel prices, Finance asked all departments to evaluate their fuel needs. We asked everyone to budget accordingly, and they did. We do have the option of amending the budget every six months which may prove to be necessary given the recent surge of prices beyond our expectations.

In reviewing our purchases of fuel from May – July 2005 and comparing that to the same timeframe in 2004, the City’s total cost of fuel purchased has increased by 25%. While some of this cost increase may be attributable to having 22 more vehicles in our fleet and more roads that our employees must travel, gas prices during this timeframe have also increased an average of 10%. The City has not felt the financial effects or been billed for the staggering increases of the past few weeks yet, during which time prices have increased another 20%.

Currently we are able to buy gas at lower rate than the general public can because the City is exempt from paying $.2565 of the Federal and State taxes per gallon. For example, on August 15th, gas at the pump was $2.69. The City wound up paying $2.43 per gallon for this gas.

In our 2005/06-2006/07 Operating Budget, we budgeted approximately $338,000 for fuel purchases. Due to the recent price surges, we now anticipate that we may have to spend approximately $360,000 in fuel costs this fiscal year. In comparison, we budgeted approximately $302,000 for the 2004/05 fiscal year and finished the year with slightly under $300,000 in fuel costs.

In an additional effort to help lower fuel costs, Council approved the Fuel Dispensing System in the 2005/06 – 2009/10 Capital Improvement Program budget. Currently our fuel needs are met through an independent contractor. Installation of an on-site fueling system will allow virtually all City vehicles to be fueled at the Public Works Corp Yard at a significant cost savings. Continuing the example above, the City would have been able to purchase fuel from the State for approximately $2.10 on August 15th, which equates to a 14% savings. We anticipate that the City will save approximately $45,000 per year in fuel purchases through the new fueling station if fuel prices remain at current levels.
Since there is no way we could have anticipated the hurricane in the East which shut down eight refineries that refine 30% of the nation’s gas supply and the associated substantial increases in gas prices, we will likely request a budget amendment in January 2006. The City has spent approximately $300,000 on fuel costs over the past 12 months, and given the recent pricing pressure, we anticipate that fuel costs will be approximately $360,000 over the next 12 months.

City Administration
City of Brentwood City Council
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Brentwood, CA 94513
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