December 22, 2009
As a participant in Dukes County regional fuel bid you may or may not have entered into a contract with the R.M. Packer Fuel Co. to buy #2 fuel oil over this winter. In the past the grouping of the towns, schools and other entities has accounted for 300,000 gallons of fuel being purchased at a reduced rate. In recent years this has saved the group upwards of $100,000.
This year the bid price came in at $4.03 per gallon which at the time seemed like a good price. As you know, since then, the price has dropped substantially. Consequently, we have contacted Packer Fuel Co. and renegotiated the deal pending your approval.
In short, R. M. Packer Co. has agreed to terminate the current contract by mutual agreement on Jan. 1, 2009. In return the participants would continue to purchase fuel from R.M. Packer Co. at the daily delivery price (currently $2.70 per gallon) until July 1, 2009. This should save us all money unless the price spikes over $4.03 per gallon this winter. We are betting it won’t. The County would like to thank R.M. Packer Co. for their willingness to renegotiate the contract and help the communities maintain their budgets.
This year the bid was for a fixed price, based on the fact that many of the participants wanted a fixed price for budgeting purposes. This next year we will most likely go with a variable price tied to a price index. This will help avoid situations like the one we are currently in, at least until the market and the prices stabilize.
It is still the County’s position that there is clear advantage in bidding this product as a group. Please correspond with me letting me know that you are in favor of mutual termination of the contract and intend to continue purchasing fuel from R.M. Packer Co. at the daily delivery price until July 1, 2009.
Russell H. Smith
Dukes County Manager