FUEL PURCHASE AGREEMENT WITH CITY OF REDONDO BEACH

 

Recommendation

It is recommended that the City Council approve a contract with the City of Redondo Beach for purchase of fuel.

 

Background

State law required that all underground storage tanks be replaced or removed by December 1998. Pending resolution of the oil drilling litigation, which involves use of the City Yard, the tanks were not replaced.

In September 1998, the City made arrangements with local gas stations for fueling and approached the City of Redondo Beach about fueling at their station.

 

Analysis

The City of Redondo Beach will allow our vehicles to fuel at their facility and charge us the price they pay for the fuel, plus a $.22 overhead charge (depreciation of the fueling station, administrative costs of ordering, billing, etc.).

We are currently fueling the compressed natural gas (CNG) vehicles at 104 ^th and Aviation by LAX, which is very inconvenient. The fueling station in Torrance closed shortly after we purchased the last CNG vehicles. Diesel fuel, primarily used by the Fire Department, was being purchased at the Unocal on Pier and PCH, until their recent closure. We are now fueling at the Unocal on PCH and Torrance Boulevard in Redondo Beach, which is the closest station for diesel. Unleaded fuel is purchased at the Mobil station on PCH.

Because of the volatility of fuel prices, there are times when Redondo Beach’s fuel price has been less than the station prices, as well as times that their price is more. The most recent comparison of prices reveals that we would have saved $.19 a gallon on diesel and $.71 on CNG, but paid $.02 more for unleaded if we were fueling with Redondo Beach. Overall, the savings would have been $94.

Having the contract with Redondo Beach gives us a convenient option for fueling, particularly in the case of diesel and CNG fuel.

The contract has been approved by both City Attorneys and is on the Redondo Beach City Council meeting of 12/19/00.

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