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University’s gas discount is shrinking

UMaine spends more than $186,200 on fuel this year

Posted on Sept. 29, 2008, at 12:00 a.m.

The University of Maine receives a discount on the gasoline it buys. Those savings are continually given back to the university, despite aging UMaine Facilities Management vehicles driving up maintenance costs and departments sometimes filling up cars and trucks at more expensive public gas stations.

Because of the rising cost of gas and the increasingly fragile economy, the margin between UMaine’s cost per gallon and what the everyday Mainer pays is shrinking.

“We do enjoy some purchasing power. We buy in bulk, we have a contract with C.N. Brown to buy gasoline and diesel . it ends up being less than what you would buy gasoline for out in the world,” said Joseph Szelesta, budget analyst for Facilities Management. “It is obviously a boat-load less than what the campus community would buy someplace else.”

Between the end of the 2007 and 2008 fiscal years, $176,983 worth of gas and diesel had been used by Facilities Managment vehicles through the campus pumps.

Other non-Facilities Management university vehicles consumed $43,193 of the university’s supply. During the time, 55,485 gallons of gas and diesel were consumed on campus by Facilities Management vehicles, making the average cost of gas $3.03 and the average cost of diesel $3.43 for Facilities Management.

All other vehicle drivers buying with Unrestricted Education and General Funding (E&G), on campus, were charged an average of $3.02 for gas and an average of $3.39 for diesel. E&G is the university’s annual operating state allocation, according to Szelesta.

“There is a disparity there, and that has to do a lot with timing: When are you’re buying the fuel. This is an average across the entire year,” Szelesta said.

The disparity also has to do with volume.

“We might have bought 5,000 gallons at $3 or 3,000 gallons at $3.50, but if you weigh that average . it is going to be closer to the lower price rather than closer to the higher price because of the volume that you purchased at the lower price. So, it is a weighted average over a year,” said Stewart Harvey, associate executive director of Facilities Management maintenance and services.

The national average prices of gasoline and diesel per gallon for 2008 is expected to be $3.61 and $4.09 by the end of the year, respectively, according to the Energy Information Administration, a statistical agency of the Department of Energy.

That leaves a 59-cent margin between the national gas average and the university’s E&G gas price.

“We’re passing on those savings to the campus,” Szelesta said.

That margin used to be bigger.

“Just a couple of years ago, that differential between what we were getting for gas on our contract and what was paying out on the pump was actually even wider. Back in 2005, we were buying gas at something close to 85 cents, where the rest of the world was paying a $1.50,” Szelesta said. “With the crunch going on these days, it is tougher and tougher to get that favorable break. There’s a formula behind it though, that I’m really not privy to, but my understanding is that it is market plus a markup rate that’s determined by the oil companies. But, because we are state, we get favorable breaks because we don’t have to pay state tax – stuff like that.”

The money the university spends on gas from its on-campus pumps does not include gas bought by other departments off campus. For varying reasons, other departments sometimes choose to fill up their vehicles at public gas stations, rather than at the university garage, thereby providing additional – possibly unnecessary cost – to the university.

The total cost of gas billed to the university at the end of the 2008 fiscal year, including gas bought off campus, was $186,272.89 for Facilities Management vehicles and $62,616.51 for other vehicle drivers paying with E&G money.

That means $28,712 of the total gas budget was spent off campus.

“Say someone has their vehicle that’s owned by E&G, and they go down to Augusta. Their tank runs dry down in Augusta, they fill up down in Augusta. So, there’s fuel costs outside of it [the university] as well,” Szelesta said. “We do get some savings, due to our contract, and we pass that on to the campus community, but it is not the entire picture of what the campus fuel cost is.”

Other campuses take advantage of the university’s cheaper gas.

“When it comes to fueling up, all the other campuses – could be Fort Kent, could be Augusta or whatever – within this area, they fuel up here,” said George “Bo” McLaughlin, the university garage supervisor.

UMaine Facilities Management operates 146 vehicles and takes care of the 50 in the motor pool, which is the campus car-rental service, similar to the no-longer employed Zipcar program, being run entirely by the university.

Of Facility Management’s 146 vehicles, 124 are more than five years old, 25 are more than 15 years old and 11 are past 20 years. Facility Management’s fleet includes snowplows, lawnmowers, vans and other vehicles. The maintenance costs for the fleet during the 2007 fiscal year were $289,580 and $307,127 at the end of 2008.

“Twenty-five of our vehicles in our facilities fleet are over 15 years old. In order to fix that, what we have done is we have recently instituted a capital plan for a grounds shop, which is basically trying to address that very thing: How do we get some of those older vehicles out of our fleet and replace them with new ones? The hope there is that if we do that, we can start reducing some of our maintenance expenses,” Szelesta said.

The grounds shop, which began last year, will help defray maintenance costs.

The selling and buying of a lot of the university’s vehicles goes on outside the Facility Management department – they only find out about it at the end of the year when they audit the entire campus to find out maintenance needs, registration data and what vehicles are in need of state inspection.

“We keep track of those vehicles that are bought and sold, but we only do that on an annual basis,” Harvey said.

It is unknown how many vehicles the university employs.

This entry was posted on Monday, September 29th, 2008, 12:00 am. You can follow any responses to this article through the RSS feed.