THUNDER BAY – Record-high gas and diesel prices are making their mark on the City of Thunder Bay’s budget, with the municipal government expected to go $420,000 over target on fuel by the end of the year.
The estimate is included in a first quarter financial review released by the city, and takes into account industry price projections and historic usage patterns.
Along with a heavy snow clearing season and inflated police spending, the rising fuel costs have contributed to a projection the city will finish the year roughly a million dollars in the red.
Gas and diesel are always volatile, but energy analyst Vanessa DeGiacomo-Zwaresh said this year had baffled expectations in a way she hasn’t experienced in a decade and a half with the city.
“I have data and price markers all the way back to 2005. We've never seen the costs we’ve seen this year – never,” she said. “It’s a unique year. When we did the budget last year, we never expected to see the prices we’re seeing.”
The city is trending 20 per cent above the pre-pandemic three-year average for spending on gasoline and diesel.
Municipal operations use around four million litres of fuel in an average year, including public transit, police, fire, EMS, and snow clearing, DeGiacomo-Zwaresh said.
Roughly three quarters of that is diesel, and most of the rest is gasoline, with some biodiesel used in the warmer months.
The city is also pursuing electrifying its fleet, though the pace of that transition has frustrated some elected leaders.
Gas and diesel prices have cooled somewhat since hitting all-time highs in March, and DeGiacomo-Zwaresh hopes some further relief could come by the third quarter of 2022, but analysts expect costs will remain high.
Prices were already near record highs early in the year with the recovery of the manufacturing sector and easing of COVID restrictions. The Russian invasion of Ukraine, and the resulting move away from Russian oil and gas, are expected to keep prices elevated.
The increases are compounded by the fact the city’s fuel consumption is returning to normal after a pandemic dip, DeGiacomo-Zwaresh said.
Vehicles in the municipal fleet fill up at city fuel farms at Front Street, Mountdale Avenue, and the Mapleward landfill.
The city issues a public tender for the supply of fuel, with prices based on the Thunder Bay rack rate, cutting out the retail mark-up at the pump.
