How the rise and fall of fuel cost will affect a local government s budget
Introduction The case analysis that our group has chosen to evaluate is how the rise and fall of fuel cost will affect a local government・s budget. ... These two events have caused a dramatic change in fuel cost. ... Given these three factors, we chose Charleston County Fleet Operations・ fuel and maintenance budget to analyze for this project. We have discovered that a slight increase or decrease in fuel cost can cause problems for Charleston County government. Background Information Charleston County Government is one of the largest local government entities in the state of South Carolina. The area that this government serves is also very large in population and fairly large geographically. ... A slight change in the price of gasoline or diesel fuel could offset the balance of the budget. This portion of the analysis will introduce information regarding vehicles, amounts of fuel used, contract fuel prices, and budgeting as it relates to fleet operations. ... The Charleston County Sheriff・s Office has possession of about 300 of the county owned vehicles. The county annually has to replace approximately 60 to 80 of the Sheriff・s Office vehicles per year due to high mileage. ... Garrett states that fleet operations annually uses 722,947 gallons of unleaded fuel each year. ... Garrett further stated that the county also uses 483,911 gallons of diesel fuel annually. Given the mere volume of fuel utilized by Charleston County vehicles, a slight change in the price of fuel can have a detrimental affect on the budget. Charleston County Fleet Operations currently uses a bidding system for fuel contract prices. ... The rate for diesel fuel is currently $1. ... At the current time, the contract rate is much lower than the average retail rate for both gasoline and diesel fuel. ... The contracts that are negotiated do not always change or take affect as soon as the new budget year starts. The current budget for fleet operations maintenance is about $4,429,790. ... To account for the fuel in the current budget, $918,142. ... 29 is marked for diesel fuel. The current budget allows for a total of $1,590,778.98 to be utilized for fuel expenses. ... The budget that is proposed annually for fleet operation maintenance and fuel uses historical spending data to compute the projected funds for the following years operation. There is no provision within fleet operations that takes fuel price fluctuation in to account when it comes to next year・s budget. There is also no plan in place that looks at future rises or decreases in fuel. ... In combination, these market forces have moved gasoline prices higher: Increase in crude prices: The cost of crude oil has increased in recent months, based in part upon concerns about reliable crude oil supplies.