MTA fuel contracts lead to grandstanding

Did the MTA screw up a fuel contract and thus cost themselves a few million dollars? That’s the question on the minds of The Daily News and Metro today.

Let’s start with The Daily News. As part of their editorial-news Halt the Hike coverage, The News notes that the MTA clearly sacrificed a savings opportunity of millions of dollars when they neglected to purchase fuel in July at lower prices than today’s for use next year and the year after. Pete Donohue:

The Metropolitan Transportation Authority board set aside $150 million in July to buy fuel to be used next year and in 2009.

Staffers didn’t realize until September that a key contract involving fuel delivery was expiring. By then, the lower-price deal couldn’t be locked in because a new contract would have to be put out for bid, a long process, MTA Chief Financial Officer Gary Dellaverson told board members at a committee meeting yesterday.

Prices have “skyrocketed” since July, Dellaverson said, and the MTA has all but given up on the idea.

In an article that rings a little bit like quote-mining, MTA Board Member Andrew Saul, who is firmly against the fare hikes despite missing every fare hike meeting, and Assemblyman Richard Brodsky were harshly critical of the Authority.

Brodsky, using the ever-popular royal we, was particular offended by the MTA’s blunder. “It looks like MTA lost millions of dollars in savings by not being light enough on their feet,” Brodsky said. “That money could have been used to save the fare, and we’ll be asking the MTA to explain how this happened.”

Saul meanwhile wasn’t sure how much of a mistake the MTA. “That was a huge mistake, though, right?” Saul said. “We would have had the July price, which was God knows how much cheaper than it is now.”

Now, based on these reactions, you would think we were talking about hundreds of millions of dollars that the MTA is flushing down the proverbial toilet. In reality, the difference in fuel costs, according to The Daily News, is $12 million. It’s not chump change, but in the grand scheme of the fare hike and the potential $6-billion deficit, that $12 million won’t exactly break the bank.

But wait, there’s more. Patrick Arden at Metro, in a poorly-edited article, notes that it probably isn’t too late to buy the fuel now. At that time, Saul’s fellow MTA board members expressed skepticism over the deal, and today, Wall Street analyst Jim Cramer feels fuel prices are still lower than they will be over the next months.

When all is said and done, it sounds like Saul’s and Brodsky’s finger-pointing will lead back to hesitant board members unwilling to hedge MTA money on fuel futures in a time of economic instability. That’s a fairly conservative investment approach but one that makes sense. Too bad we’re stuck once again with grandstanding politicians trying to make mountains out of mole hills.