Broken Arrow City Council
Meeting of: 06-20-2022
Title:
title
Approval of and authorization to execute a third renewal for gasoline and diesel fuel with Frost Oil, dba Bowers Oil, for the period of July 1, 2022 to June 30, 2023
End
Background:
The City purchases approximately 180,000 gallons of gasoline and 250,000 gallons of Diesel annually for our stock fuel supply. The cost for fuel in FY 2021 was $965,960 and FY 2022 it is estimated to be approximately $1,400,000. Fuel is typically purchased weekly and hauled by tanker to the City's fuel sites. The Logistics Division monitors the City's fuel supply and when fuel reaches a certain level, fuel is reordered. Area fuel prices are monitored by OPIS (Oil Price Information Service). OPIS is the most widely accepted fuel price benchmark for supply contracts and competitive positioning. The city cannot control the cost of fuel. As such, the main variable between suppliers is the delivery charge and their markup on fuel. To minimize the effect local demand puts on fuel prices, the Logistics Division sought bids to supply fuel for the city on an annual basis based on the unit cost per gallon above/below the OPIS rack average posting. This is cost of fuel where petroleum products are sold at the wholesale level from primary storage and the racks where tanker trucks fill up. By contracting this fuel supply, the City can reduce fuel costs by eliminating demand driven cost increases in markup and delivery charges thru fixed pricing. This also simplifies the purchasing process we go through to acquire fuel. Bids were advertised in 2020 and were sent to twelve suppliers. Eight returned bids. The low bid was submitted by Frost Oil. Their references provided very positive feedback and staff has been satisfied with the deliveries, therefore Staff is recommending approval of the third renewal of the contract to Frost Oil dba Bowers Oil.
Funds for fuel are budgeted by each Department.
Cost: Cost of fuel
Fund...
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