CTA price hedging saves big bucks on diesel fuel

While the average highway price of diesel fuel last week was about $3.82 per gallon, the CTA is paying $2.82 per gallon due to price hedging.

“Going forward, 75% of the 2011 fuel budget is hedged at a price of $3.03 per gallon,” CTA President Richard Rodriguez told the board last week. “By contrast, the market price for #1 low sulfur diesel fuel was $3.72 as of close of business Monday.”

The Tribune reports:

Partly because of social unrest in Libya and other oil-producing
countries in the Middle East, CTA officials negotiated fuel-hedging
contracts to cover 75 percent of the diesel the transit agency’s buses
will burn this year. The budgeted price is $3.05 per gallon, or 23 cents
a gallon more than what the agency currently is paying through March.

For the remaining 25 percent, the CTA has both above-market orders and below-market orders in place, Walker said.

“That strategy gives us another opportunity to protect ourselves” if fuel prices continue to rise, she said.

About six months ago, less than 20 percent of the CTA’s fuel budget was being hedged, officials said.


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  • Let's just say that we hope this doesn't come out like in 2009.

    I also note that the Press in 2009 wasn't printing Karen Walker's reports that as a result of hedging, CTA was paying $4.69 a gallon.

    Also, they talk about the highway price, without stating that CTA doesn't pay fuel taxes.

    I was waiting for this to come up here, but apparently the press again tells only half the story, or has amnesia that I don't.

  • In reply to jack:

    ... And I was waiting for your comment. Hopefully, when you combine the 2009 fiasco with this year, the CTA breaks even.

  • In reply to KevinO’Neil:

    That's going to take $51 million.

    And, if Libya is pacified one way or the other, oil prices could go down. Heck, around here, there was a one day spike for regular gas at $3.959, then the two stations went back down to $3.759.

    I'm not clairvoyant, but CTA proved it surely isn't.

    Maybe if they took the $51 million out of Walker's pocket, we break even. Won't happen, though.

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