Hedging eases pain of rising fuel prices for COTA
Sunday, April 10, 2011 03:18 AM
By Robert Vitale
THE COLUMBUS DISPATCH
For people who expect to burn through 3 million gallons of diesel fuel this year, COTA officials are awfully calm about rising oil prices.
Since January 2010, the Central Ohio Transit Authority has been hedging against spikes in fuel costs by buying and selling contracts for heating oil. Historically, prices of the two products rise and fall in tandem, which means that as COTA spends more on fuel, it earns more on heating oil.
…COTA Finance Director Jeffrey Vosler said the transit authority considers hedging a way to ease the risk of unexpected jumps in fuel costs.
COTA spent $268,000 more than budgeted for biodiesel fuel in the first three months of this year. But it earned $389,000 on the heating-oil contracts bought and sold through Fifth Third and KeyBank.
…As COTA works to mitigate the downside of rising fuel prices, it continues to reap the benefit to its bottom line.
Ridership has increased nearly 5 percent in the past month from the same stretch of 2010, when gas prices were as much as $1.03 a gallon lower. Since early April 2010, COTA has seen a 3.4 percent increase in riders.
COTA Fuel Hedging Helping Bottom Line
April 11, 2011 by John