Rising fuel prices hurting local governments

Published 7:00 am Wednesday, March 30, 2022

WALLOWA COUNTY — The ever-increasing price of petroleum is putting a hitch in the current budget process local governments are going through, as they are forced to increase the amounts allocated for fuel and asphalt.

But to put an actual number on what that increase is costing is nearly impossible, most local officials say.

“It’s a moving target all the time,” said Susan Roberts, chairwoman of the Wallowa County Board of Commissioners, during a telephone interview Monday, March 28.

Budget pain

She said the county is currently in negotiations with Wallowa County Grain Growers to determine the price for fuel for the next budget year.

Enterprise city Administrator Lacey McQuead agreed, saying the city has no idea just what the cost of petroleum will end up at, but given recent spikes, the city is intending to about double its fuel budget for several departments, such as Public Works’ five separate departments, as well as the police and fire departments.

“We’re looking at doubling our budget amounts this year,” McQuead said March 28. “It’s hard to figure what the budget numbers will look like.”

She said usually, the city bases each year’s budget on the previous year’s costs. This year took the city — and other local governments — by a surprise.

“The cost of fuel is a surprise this year. … We didn’t anticipate this big a jump,” she said. “That’s why we’re looking at doubling our budget numbers.”

Most departments have revenue streams to deal with the budget increases, along with the general fund, but there could be changes in the works.

In general, McQuead said, the city will carry on normally.

“But if it gets to a point that we can’t sustain the way we do things, we’ll have to modify the way we’re doing things,” she said. “If it increases too much, we’ll have to look at other options.”

McQuead said some departments, such as administration, won’t require a budget increase, since most of its cost is for travel that has already been completed.

“We have enough to be able to carry the cost … but we’ll see how long that lasts,” she said.

Road work

One area that could be affected is in road work, such as paving. Most local governments, as well as the Oregon Department of Transportation, get asphalt from the Wallowa County Road Department’s asphalt plant located along Highway 3 north of Enterprise. The petroleum that is increasing in price is a major component of asphalt.

Enterprise Public Works Director Shawn Young said that the cost of asphalt could rise to the point the city won’t be able to do as much paving as planned.

“It’ll change what we can do. If we have to pay double, it’ll keep us from doing as much,” Young said last week. “We’re all going to have to button down a bit and see where the dust settles. … Hopefully when dust settles it’ll be somewhere we can operate and operate efficiently.”

Roberts said she doesn’t have a figure on how much the county sells asphalt for because — again — that jumps almost daily.

“There is no ballpark figure” to estimate the cost of asphalt, Roberts said. “If somebody wants a project, we have to figure what it’ll be” depending on the size of the project, the quantity of asphalt — and the price of petroleum that day. “These things are not set in stone; they’re always moving.”

Joseph’s interim city Administrator Brock Eckstein said the skyrocketing price of fuel won’t have a serious impact on his city, given its small size. However, he said March 28, the city has already spent about 82% of the $10,000 it budgeted for fuel — an amount that has to last until June 30, the end of the budget year.

Eckstein said the city also uses asphalt from the county asphalt plant, but he won’t know the actual cost until any planned projects are put out for bid.

“I think the biggest impact it’ll have on the city … is the cost of asphalt is through the roof right now so that’ll slow down some of our paving operations,” he said.

Eckstein has noticed in his travels that some places are opting for concrete instead of asphalt. He said recently he saw projects in Boise, Idaho, and on an interstate highway in Wyoming that were doing just that, and he suspects it’s because of the high cost of petroleum in the asphalt. He admitted he wasn’t certain if those projects were simply using a concrete base and intending a thin asphalt overlay, but it gave him pause. Like other local officials, he agreed the cost of asphalt can be uncertain.

“I know there are lots of cities using concrete instead of asphalt because it’s cheaper,” he said.

Eckstein said that some of Joseph’s streets that aren’t paved receive a sprinkling of an oil-like product, but road departments have moved away from using petroleum in favor of a type of banana oil for dust abatement.

“It’s cheaper and more environmentally friendly,” he said.

Wallowa Mayor Gary Hulse said his city has no paving projects planned for the coming construction year, but that doesn’t mean a need couldn’t arise.

“We’ll do what we have to do, but it shouldn’t limit what we have to do,” Hulse said March 25. “It could limit in other ways.”

Across-the-board pain

Hulse noted that it isn’t just travel with Wallowa’s few vehicles or paving that are affected by the rising price of petroleum.

“The price of fuel is going to affect just about everything the city has to do, from the price of delivering freight to everything else,” he said, noting that the city is getting started on its budget process. “We’re watching the price of everything because we’re limited in what we can spend in our budget.”

Hulse said Wallowa gets its fuel from local suppliers such as Coleman Oil or Burns Oil, paying the prevailing rate that ranges from approximately $3.50-3.65 a gallon. He didn’t have a breakdown as to the cost difference between gasoline and diesel.

He said he anticipates pain of the cost of fuel in the foreseeable future.

“It’s going to (hurt),” Hulse said. “Right now, we still have some money in our budget, but we’ll have to watch it as we’re getting into the budget year.”

Prevailing price

According to the U.S. Energy Information Administration website March 24, in February, regular gasoline cost $3.52 a gallon in the Northwest, while diesel fuel was $4.03 a gallon.

Both regional fuels appear to have peaked on March 14 at $4.675 for regular and $5.416 for diesel, the website said. By March 21, both had eased off a little coming in at $4.671 for regular and $5.319 for diesel.

The website also provided a breakdown of how much per gallon goes where.

In paying for a gallon of fuel, 61% of the cost of regular gasoline goes toward crude oil, while 53% of the cost of diesel goes toward crude. An estimated 14% of cost per gallon for each goes toward taxes. Refining and marketing costs were comparable to the cost for taxes.

Roberts said local governments are not able to avoid paying the taxes on fuel.

In Enterprise, the cost of regular was $4.79 a gallon for regular on March 28, and $5.89 a gallon for diesel.