Southwestern Pennsylvania school districts win gamble on gas prices
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Imagine paying $2.65 a gallon for gasoline.
That price will be a reality this school year for 22 school districts in southwestern Pennsylvania. The districts are part of a consortium that the Allegheny Intermediate Unit organizes to help districts buy utilities and supplies for lower prices.
The AIU consortium takes orders from districts in the southwestern Pennsylvania region, allowing the unit to "aggregate purchasing power," said Patrick Sable, chief financial officer for the agency.
"The more you buy, the better price you get," he said.
This year, the agency took bids from a number of suppliers for more than 313,000 gallons of gasoline and more than 3.6 million gallons of diesel fuel, both of which are used for school buses, said Sarah McCluan, a spokeswoman for the agency. Fifty-two districts bought diesel fuel, which is available for $2.86 a gallon through the AIU; 22 purchased gasoline.
Fuel suppliers buy diesel and gas futures, which allows districts to lock in prices with suppliers for an entire year starting in July, Mr. Sable said.
If prices move up throughout the year, then districts benefit because they have locked in a low price, but if prices continue to move down, the districts will have left money on the table.
At a time when state cuts are hurting budgets, districts appreciate any savings.
"We still think it's a better deal for us overall to lock into a price," said Vicki Flotta, a spokeswoman for Bethel Park School District, which uses the AIU program to purchase diesel and gas for school buses.
Bids in late May came in at $3.11 per gallon for diesel, $3.05 per gallon for gasoline and $3.13 for heating oil. That would have yielded about $135,000 in savings for districts, across the three products, Mr. Sable said.
But he and other members of the joint purchasing committee, which includes various district business administrators and transportation managers, thought prices would continue to move down. The group decided to wait to lock in prices for the 2012-13 year.
On June 15, they again took bids. The gamble appears to have paid off: prices had dropped 25 cents per gallon for diesel, 40 cents per gallon for gasoline and 26 cents per gallon for heating oil. The committee locked in those prices for the 2012-13 school year, yielding an estimated $1.3 million in savings compared with the school year that just ended, Mr. Sable said.
This year's prices were about $67,000 lower than what Moon Area School District initially estimated in its budget, said Megan Edwards, a district spokeswoman.
The Allegheny Intermediate Unit's expertise at soliciting bids also helps school districts, said Toni Valicenti, business manager for the East Allegheny School District, which purchases diesel.
The agency charges no fee to districts who want to join the consortium.
It also offers joint purchasing programs for natural gas, electricity, heating oil and other supplies. The organization is funded through a mix of grants, state funds and fees from services, such as special education, that the unit provides to school districts.
The average per gallon price for regular gas in Pennsylvania currently is $3.33, according to the American Automobile Association.
First Published July 5, 2012 12:00 am