Increased fuel costs in 1st months of 2022 burned up extra $3.4M in Winnipeg budget: report

The City of Winnipeg spent millions of dollars more on fuel this year than average, as high pump prices drove costs up.

Between January and April, fuel costs were $3.4 million higher than the average over the same period from 2019 to 2021, according to a report that will be presented to city council's executive policy committee next week.

"There's all sorts of inflationary pressures and in particular on fuel," Coun. Jeff Browaty (North Kildonan), chair of the city's finance committee, said Friday.

"We operate a large transit fleet. The diesel fuel used there, obviously, is more expensive this year. Our light fleet of vehicles, whether it's police, public works, pickup trucks … they use gas, and I think all Winnipeggers recognize that the price of the pump is up."

According to the Winnipeg fleet management agency's 2022 business plan, the city's fleet included 1,305 vehicles as of Dec. 31, 2020.

In the first four months of this year, city vehicles used 7.6 million litres of fuel, totalling $11 million.

The city had budgeted for fuel prices between $1.14 and $1.25 per litre in 2022 but now expects prices between $1.48 and $1.69 per litre for the rest of the year — an increase of 30 per cent.

Fuel prices have dropped since spiking past the $2 per litre mark for regular gasoline earlier this summer, but the average price in Winnipeg on Friday was still 164.4 cents per litre, according to the Canadian Automobile Association. 

City snow clearing and ice control operations during last winter's extreme snowfall also increased fuel use.

Winnipeg Transit's fuel costs were up by more than $2 million, while costs for all other city crews were more than $1 million above average.

"We always do budget on the high end, based on the best information the year before, but in this case, we've obviously blown past those high-level estimates that we would normally use," Browaty said.

The city is projecting a budget deficit of nearly $56 million this year, due mainly to fuel costs, snow clearing and the ongoing effects of the COVID-19 pandemic.

Higher fuel prices won't change the city's plans for the remainder of this fiscal year, but city council will have to figure out how to account for it in the next budget cycle after the Oct. 26 civic election, Browaty said.

Cutting fuel costs

The city has tried a number of approaches to reducing fuel costs in recent years. 

A two-year pilot project testing all-electric vehicles recently wrapped up. The project found that all-electric vehicles can be used for many light-duty operations, and had significantly lower operating costs than equivalent gas or hybrid vehicles, according to a report that will be presented to the innovation and economic development committee on Monday.

Over the course of two years, the two vehicles were driven a total of 73,888 kilometres, with an operating cost of three cents per kilometre, compared to 19 cents per kilometre for a gas or hybrid vehicle.

However, the higher price of the electric vehicles, as well as the cost of charging stations, meant that each all-electric vehicle cost a net $1,800 more over the two years.

The report did note, though, that variables may change in the near future that would "enable an all-electric vehicle to achieve positive financial savings" compared to hybrid vehicles, including the possibility of lower purchase prices for the electric vehicles or higher gas prices.

Other measures to reduce fuel consumption include efforts to track and reduce idling engines and swap heavier vehicles for more fuel-efficient models.

"There's different things that can be done to mitigate fuel burn, whether it's anti-idling [or changing] the way you drive," Browaty said. 

But "the harsh reality is, gas is more expensive right now. I'm not getting any huge breaks in the near term, so we're going to have to deal with it."

The report going to executive policy committee on Wednesday notes that the city's chief administrative officer is currently talking to the provincial and federal governments about financial assistance to help with fuel costs.