How Minnesota cities and counties are dealing with rising gas prices

Source: By Katelyn Vue and David Chanen, Star Tribune • Posted: Tuesday, July 12, 2022

From looking at hybrids to pushing carpooling, Minnesota communities are trying to find ways to handle skyrocketing costs.

Shocked at how much it is costing to fill up your car with gas these days? Imagine running a city fleet of some 400 vehicles — many of them gas guzzlers.

Skyrocketing gas prices recently neared $5 a gallon in the Twin Cities. Motorists filling up their cars and trucks are not the only ones feeling the pinch. Governments with their squad cars, dump trucks, fire engines and park equipment are scrambling to make sure their spending remains on budget and their vehicles remain on the road.

Roads and highways still need to be paved. Bridges require maintenance. Properties have to be assessed. Balancing services and increasing fuel and oil prices adds another curveball in already trying pandemic.

“We’re projecting we will be coming in over our fuel budget,” said Taylor Gronau, assistant city administrator of Buffalo, Minn. “However, a lot of those trips are necessary and needed.”

Many Minnesota communities are trying new ways to cut costs.

The city of Buffalo is urging carpooling and checking tire pressure on its vehicles to improve gas efficiency. Several Minneapolis agencies have considered expanding an e-bike program for home inspectors to get around town. And several communities are trying to add more electric and hybrid vehicles to their fleets — only to find huge backlogs.

With high gas prices trending more than halfway through the year, some city officials are worried about having enough to cover fuel costs and subsequently cutting costs or overspending on government-owned vehicles.

More than 50 local governments are under state fuel contacts, which cover a majority of fuel purchases in bulk and at a fixed rate, throughout a yearly basis. However, many local governments still rely on buying more fuel to cover all usage of vehicle fleets, which has increasingly hurt their fuel budgets.

Bigger urban areas, such as Minneapolis and Ramsey County, handle hundreds of vehicles, that span different departments, including police, fire and parks and recreation. Smaller cities such as Buffalo and Maplewood have smaller fleets, meaning that each city’s budget for fuel varies.

But most city officials agree that as gas prices continue to rise or stay high, they expect to also raise their fuel budgets next year.

The situation may get worse when the next winter is here in Minnesota. Some city officials expect that they will reach the full budget or go over after the winter.

During the winter, snow storms and major weather events dictate fuel usage, said George Hargrove, service team controller of finance and accounting at the Ramsey County Public Works Department. Having enough fuel to plow the snowy roads plays a significant role in fuel budgeting, city officials said.

“What we’re really watching for is what the weather’s like, come October, November, December. Especially, November and December,” Hargrove said. “Because if it doesn’t snow much or we don’t have ice storms and things like that, then we’ll be alright.”

In Redwood County in southern Minnesota, most of its 875 square miles is rural driving. Bid prices for contracts have definitely been impacted by higher fuel prices, said County Administrator Vicki Kletscher.

“You have a sheriff’s office that is working 24 hours 7 days a week,” she said. “The gas increase is really hitting their budget. Farmers are getting hit as well.”

Hennepin County has more than 1,200 vehicles, including squad car and ambulances. They have a $1.7 million fuel budget for 2022, and used $425,000 so far. They have over a dozen hybrid cars and have ordered more, but they are finding a backlog from dealerships, said fleet manager Jay Baldwin.

“We plan to replace any gas vehicles with hybrids or electric when they can be replaced,” he said. “We also have switched some smaller equipment from gas to battery operated.”

What are the solutions?

Some cities have already started to transition to electric or hybrid vehicles. For example, St. Louis Park passed a Climate Action Plan in 2018 to reduce 25% of vehicle emissions by 2030, by replacing current fleet vehicles with electric vehicles and evaluating gas-powered equipment for replacement.

Back in 2020, Minneapolis purchased hybrid squad cars which increased the miles-per-gallon from 8 miles per gallon to 14. In addition, hybrid squad cars don’t require the engine to run for the lights to be on unlike the older versions, said Al Thunberg, director of the Fleet Services division of the Minneapolis Public Works Department.

“The increased miles-per-gallon has saved us a lot of money as well, regardless of how much you’re paying per gallon,” Thunberg said. “Every gallon less you buy, you’re saving money.”

Earlier this summer, Minneapolis touted a program that gave inspectors the option of taking e-bikes to jobsites. It saved wear and tear on the vehicle fleet and cut the city’s gas consumption. Several other city agencies, from IT and public works staff to the Park Board, were looking at the program for themselves.

Buffalo is one of the cities not partnered in a Minnesota state fuel contract and rely on retail gas stations. To make travel less expensive, Gronau said they try to reduce the amount of weight and drag in the vehicle, carpool or check the tire pressure.

“So things like that, that probably makes an incremental difference,” he said.

Looking ahead

According to the AAA, the national average for a gallon of gas has decreased by a nickel to $4.75. However, many economists have said that nationally gas prices has not peaked.

At this point of the year, many cities are in the evaluation phase to determine next year’s budget for fuel. Some cities are deciding to raise their fuel budget to hold up against current high and potential rising gas prices.

Anoka County, which contracts with an oil company for gas, has used nearly half of its $1.2 million fuel budget for 2022, said the county’s chief financial officer Corey Kampf.

They are actually seeing mileage and gas equipment usage go down slightly because they have been able to hire part-time workers during the pandemic, he said. Lawn mowing isn’t done as frequently and there will probably be less plow drivers this winter.

“We just have to be innovative on how we provide services,” he said.