MTA Gets Price Gouged On Bus Fuel

The story is well known around these parts & other likewise places, the MTA’s finances are in horrible shape. The agency finds itself trying to find any & every way possible to cut costs & save money to help starve off $1+ billion dollar budget deficit. While this daily battle continues, news has come out that the agency is getting price gouged on the bus fuel it purchases. The MTA’s bus fuel costs will rise by $26 million, triple what it payed last year. New York Daily News’ Pete Donohue has more in this report:

The MTA’s bus fuel costs are skyrocketing by $26 million – more than triple what the cash-strapped authority paid last year – after it got caught in a no-win contract negotiation, the Daily News has learned.

Not a single company had submitted bids to supply fuel to city bus depots by the Aug. 21 deadline, leaving only three weeks until the existing contract expired, according to a Metropolitan Transportation Authority staff summary obtained by The News.

Faced with the possibility of running out of fuel, the MTA asked Sprague Energy Corp., its existing supplier, to agree to a contract extension.

Sprague, of New Hampshire, saw an opportunity.

The company demanded that the MTA more than triple its pay rate – and commit to buying a full year’s supply of the hard-to-get fuel, according to the summary of a contract signed by Sprague and the MTA subsidiary, NYC Transit.

Click here for the complete report.

This news is absolutely disturbing on many fronts. The MTA is in hot enough water as it is financially, it can not afford to get gouged like this & hope to make any dent in its budget deficit. I also have to question the individuals responsible for assuming they would get bids for their fuel contract just because it is the MTA. This backwards thinking has just helped them inch ever so closer to the poor house.

In Pete’s report, he notes that the MTA is looking into a more popular & cost efficient fuel to use on their bus fleet. I advise them to look & look hard into switching fuel types as this kind of price gouging can’t continue to happen if they ever hope to get out of the financial black hole they currently reside in.

xoxo Transit Blogger

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[…] again it is in an unfortunate light. Back in September 2008, I wrote about how the agency was being price gouged on the contract by long time supplier Sprague Energy Corp. Fast forward to 2009 when I wrote about […]

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