Record-high pump prices costing area municipalities millions more than budgeted

Municipalities in Windsor-Essex are pumping out millions of dollars more than budgeted due to unprecedented high prices at the pump.

If the record-breaking gas prices continue, many say they'll need to have a hard look at where that extra money will come from. In the City of Windsor, for example, a $0.50 per litre increase in fuel would cost taxpayers an estimated $2.7 million in a year.

"If the prices stay where they are right now for an extended period of time, we will definitely have to look at this from the contingency and reserves," said Shawna Boakes, executive director of operations at the City of Windsor.

The city has a $3 million contingency budget for one-time costs that exceed a budget. There is also a $260 million reserve that can be used to offset unprecedented fuel increases.

More than 350 vehicles make up Windsor's corporate fleet, which includes snow plows.

Windsor buys its fuel in bulk, as do most municipalities, which is roughly 10 cents per litre cheaper than the prices residents pay at the pump. There are nine fuelling stations scattered across the city for municipal vehicles.

Transit Windsor concerned, hopes fuel costs dip

Fuel is also a big chunk of Transit Windsor's budget — $3.9 million this year to be exact, which won't be enough if prices remain at these levels. Transit Windsor is currently paying forty to fifty cents higher per litre than what was budgeted.

High fuel prices, if they continue, will likely lead to an increase in ridership, which would lead to an uptick in revenue.- Tyson Cragg, executive director of Transit Windsor

The big spike in gas prices has been relatively manageable, for now, according to executive director Tyson Cragg. He said that's because Transit Windsor service hasn't returned to pre-pandemic levels, so the money saved there can help offset some fuel-related expenses.

Russia's shocking move to invade neighbouring Ukraine has thrown markets around the world into chaos, perhaps none more than the energy market, since the country is one of the largest producers of oil and gas in the world.

The price of regular gasoline peaked in Canada at around $186.6 per litre in March, according to GasBuddy.com. A far cry from just two years ago when that price plummeted to well below $1.00 per litre.

It's not all negative news for Transit Windsor and it's 117 buses, as a spike in gas translated to a roughly five per cent increase in ridership.

"High fuel prices, if they continue, will likely lead to an increase in ridership, which would lead to an uptick in revenue," said Cragg. 

When setting budgets for gas, Transit Windsor tries to "shoot down the middle," Cragg said. Typically, the estimates are based on historical data and known trends.

But if the price of fuel remains fairly steady at its current rate, that would require "shuffling money around" from other accounts. Cuts to service to balance the books would be a "last resort," he added.

"If this is a short-term thing, it's essentially a wash at the end of the day. Obviously we're concerned about it right now, but our hope is that this isn't sustained for any longer than necessary," said Cragg.

Other municipalities are also feeling the gasoline price pinch.

Essex, Leamington and the County of Essex weren't able to provide fuel cost information.

Going green to reduce fuel consumption

In Windsor, a plan known as Greening the Fleet is ongoing. Every time a vehicle nears the end of its life cycle, the city said it looks to see if a fully electric version is a suitable replacement.

Higher gas prices aren't accelerating this plan.

"We don't want to just run out and spend the extra money to replace vehicles randomly," said Boakes.

Right now, the city has seven fully electric vehicles and 37 hybrids.