BARRHEAD – Local contractors hauling gravel for County of Barrhead road maintenance or construction projects will get extra help with rising fuel prices.
On May 17, councillors unanimously approved a diesel fuel surcharge ranging from four per cent to 20 per cent depending on the price of diesel. The new fuel surcharge became effective May 23.
Infrastructure director Ken Hove said that due to the record-high fuel prices, without some financial help, the county's contractors will not be able to continue to haul gravel to where they need it without some additional help.
"They are telling us that they were already running with slim margins and that without additional help, profitability is impossible," he said.
This would pose a problem for the county, Hove said, noting that independent contractors haul about 60 per cent of the county's gravel for its road program.
As part of the 2022 operating budget, the county approved a four per cent increase to their contractor gravel hauling rates. However, Hove said due to the spike in fuel prices, which have risen upwards of 80 per cent in recent weeks, the county is in danger of not being able to move their gravel.
The 2022 haul rate is currently set at 25 cents per yard multiplied by the miles hauled, plus a $2.08 per yard loading factor.
Using this rate, a contractor hauling the average 22-yard load, a total of 24 miles (the county average distance) would mean they would receive $177.76 per load, Hove said. This compares to $169.84 for Westlock County and $197.40 for Lac Ste. Anne County.
It is worth noting that the Lac Ste Anne gravel haul rate fluctuates with fuel prices.
Under the new fuel surcharge, the rate for the next week would be set every Friday afternoon, with the rate becoming effective the following Monday, starting at a base diesel fuel price of $1.16 per litre, with the base surcharge rate at four per cent.
For every five-cent jump per litre, the surcharge would increase by one per cent starting at the base four per cent level, up to 20 per cent or $2 per litre diesel price.
Hove noted the fuel surcharge would be based on the Rural Municipalities of Alberta’s (RMA) diesel price, not necessarily what the public sees at the pumps. This is because a contractor could be purchasing their fuel from a variety of sources, not necessarily the same vendor the county purchases its fuel or even in the same community.
Coun. Walter Preugschas asked about the status of the fuel rebate program the province had been touting.
County manager Debbie Oyarzun said the program he was referring to was the province's promise not to collect the provincial gas tax when the price of oil was above a certain rate.
She added the reduction of the provincial 13 cent gas tax was already reflected in the pump price.
"It would even be worse if it was still in place," reeve Doug Drozd said.
Deputy Marvin Schatz asked if the surcharge would be enough to keep their contractors.
Hove believed so, adding they consulted with several of their contractors in drafting the policy.
Drozd noted the surcharge means there will be some uncertainty in the 2022 operational budget that council will have to address.
"We will bring potential options to council," Oyarzun replied. "We will be looking for ways to reduce the budget in other areas offsetting the change, but we may have to ask council for a bigger budget. But we will be able to bring potential options to council once we have more information."
Oyarzun added she is hopeful to find efficiencies elsewhere and that the need for the surcharge will be short-lived.
"We just don't know that yet," she said.
