Fuel Survey Shows No Price Ceiling in Foreseeable Future

By the Editors of School Transportation News

Those around for the oil embargos of 1973 and 1979 certainly experienced a case of déjà vu in recent weeks when viewing television news reports of long lines at Houston-area gas stations during the Hurricane Rita evacuation.

But it didn't take a natural disaster for the nation's school bus fleets to realize the dire straits of rising fuel prices. For several years now, school districts have felt the budget pinch, as costs have quickly eclipsed available funds and have forced them to implement emergency measures to simply pay the bills.

If anything, as the hundreds of domestic oil drills in the Gulf of Mexico were knocked offline by Katrina in late August, the especially harsh 2005 hurricane season illustrated just how dependent the United States is on foreign oil. Some schools in the Southeast - namely Alabama and South Carolina - faced very real possibilities of school closures because they wouldn't be able to operate school buses. Those worst-case scenarios didn't materialize, as fuel supply lines quickly came back online or temporary deals were struck with out of state fuel suppliers.

Surprisingly, however, only 68 percent of the largest school bus operators in 32 states reported problems with fuel delivery as a result of Hurricane Katrina, according to a survey conducted by School Transportation News. Still, with prices affected as far away as California and Massachusetts, it became crystal clear the ramifications of limited supply, if even in the short term.

Of the 300 total operators polled, 79 responded on the impact of rising fuel prices on their pupil transportation operations. They reported figures from the 2003-2004, 2004-2005 and 2005-2006 school years, with some staggering extrapolations to be made.

By the opening day of school this year, operators saw the average cost per gallon rise to $2.19 after realizing a 43-cent average increase to $1.48 per gallon from just over $1.15 per gallon during the previous two school years. To put this in perspective, the respondents totaled 16,194 diesel school buses in their collective fleet, plus another 7,201 vehicles they maintain.

The bar graph above demonstrates the average per gallon rise in diesel fuel prices paid by school districts on the opening day of school the past three years.

Alternative-fuel school buses numbered much fewer - 480 gasoline engine, 31 CNG and 150 other - but their fuel costs were much higher, averaging around 12 cents more a gallon this school year than their diesel counterparts.

With fuel accounting for an average of 15.8 percent of the respondents' budgets, and with fuel prices changing daily - even hourly - across the country, the possibility remains that operators will quickly exceed forecasted fuel needs. Among district-owned fleets, respondents projected a need for nearly 34.5 million gallons during 2005-2006.

For the winter months, 37 percent said they anticipate a significant price change for blended fuel while 39 percent said they do not. But many of those responding "no" resided in states with warmer climates.

As for the projected budget shortfall this school year, responses ranged from zero in only a few instances to as much as $8.2 million depending on whether the operator uses a card system at the pump or contracts for deliveries. One district in the northeast said its fuel budget was "undetermined at this time - scary."

Said another district, which wished to remain anonymous: "Each 10-cent annualized increase over fiscal year 2005 will cost $130,000. If current prices are maintained, fuel will cost an additional $1.2 million for fiscal year 2006 over fiscal year 2005 expenses."