Saskatoon Transit and the declining price of oil

Just last month Saskatoon City Council declined to approve a fare increase requested by Saskatoon Transit as part of the 2015 budget.

Nicely deconstructed here, the proposed fare increase would have netted Saskatoon Transit a whopping $313,175 in revenue, even with some funny business in their projections. Council declined to approve the proposed fare increase, due in large part to public pressure, the efforts of Bus Riders of Saskatoon, and the lingering backlash over the City’s illegal lockout of Saskatoon Transit users.

With crude oil prices falling I started to wonder what the effect would be for Saskatoon Transit. Unfortunately, good, detailed information isn’t publicly available so I had to make do with resources such as the City of Saskatoon Municipal Manual, Statistics Canada, National Resources Canada, and of course, Google.

Since I have no idea what the City pays for fuel I used retail prices in my analysis. So my estimates will probably be a little high, depending on what kind of discount the City gets as a bulk customer. Try not to get caught up in the numbers, it’s the relative change that is the important part.

Assuming Saskatoon Transit projected diesel prices to remain relatively stable, and total kilometers driven by the fleet slightly higher (as has been the trend), I would expect that a 5 cent per litre decrease in diesel cost, realized over the entire year, would save Saskatoon Transit over a quarter of a million dollars. A sustained savings of 20 cents per litre should be enough to purchase two new buses.

Diesel futures prices have fallen close to 30% (about $0.28 per litre) since last January and retail prices at about 20% are not far behind.

Transit fuel savings estimate

Diesel prices tend to correlate with heating oil prices and when the heating season starts to end typically prices drop as well and a lower Canadian Dollar has to be considered as well. But if diesel prices continue to drop, or they stabilize at current levels…

Remind me again how much revenue that fare increase was supposed to generate?



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