According to City Manager Lee Feldman, the unanimous vote will freeze current low fuel prices in the futures market “so that we are protected by rising pricing.”
As of April 27th the price for a barrel of oil had dropped below $13, Feldman told the commission.
The City purchases approximately 1.6 million gallons of unleaded and diesel fuel each year to supply its fleet of cars, trucks and buses.
The fuel is used for RTS buses and vehicles for police, fire rescue, GRU and those used for City business.
“This allows us to manage prices out into the future, Feldman said.
Hedging minimizes fuel price volatility by allowing the City to acquire options to purchase fuel at a fixed price at a future date.
The city manager will work with the $33,000-a-year hedging consultant Linwood Capital, LLC “to engage in hedging of unleaded and diesel fuel in compliance with the City’s approved investment,” according to the staff recommendation.
The policy, which passed unanimously, includes the establishment of a Risk Oversight Committee that will deliver quarterly reports to the City.