Currently crude oil is trading at new highs almost daily. The cost of this
commodity subsequently translates to higher prices to consumers. The Authority
consumes close to 12,000,000 gallons of diesel fuel each fiscal year. In
December 2006 and January 2007, the Authority executed swap transactions to
fix the price of a portion of the fuel it would consume in FY08. As a result, the
cost of fuel for this fiscal year will be reduced by approximately $5,000,000. In
July 2008, the Authority will begin to bear the full cost impact of increases in
diesel fuel. Execution of a swap today would only assure the payment of
extraordinarily high prices currently being reflected in the market. Current market
assessments by the Energy Information Administration and others suggest that
price pressures will moderate in calendar 2009 as a result of slowing economic
activity. The Authority would look to fix the price of a portion of its future fuel
needs once the price of oil moves to a level which would guarantee the
achievement of the budgeted price. In order to execute effective swaps, staff
anticipates that the price of oil will need to fall to approximately $90.00 a barrel.
__________________________________________________________________________ floating tanks bsn nutrition
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