Taking a gamble on gas

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

Data pix.
MEMPHIS, Tenn. -- Everyone gambles with the price at the pump.

One day it's one price and then the next it jumps.

But the WREG Investigators learned the City of Memphis gambled much more when it came to the price it payed to fuel up it's 5,000 fleet of city run vehicles.

When gas prices hovered around the $3 mark a couple of years ago, Memphis rolled the dice and bet it would stay high.

The city entered into a contract with Petroleum Traders Corporation to lock in a rate of $2.69 a gallon.

"We decided to lock in based on the trends we'd seen in previous years so the fuel rates were trending high. We locked in for a year and it was of course a gamble." said Antonio Adams with the City of Memphis.

The city gambled and lost.

When gas prices in Shelby County dropped to $1.85 in December, the city didn`t see the savings.

Instead it was still paying $2.69 a gallon to Petroleum Traders.

"That was only for a short period of time. I think when the prices bottomed out in December and in January, the city was paying for a short period of time a locked in rate which was a little higher than those at the pump," Adams told us.

Nashville, Knoxville and Chattanooga also bet on their gas prices.

When trying to guess how high or low the price of oil will go, you don`t always win but the City of Memphis said overall the gamble has been good for city taxpayers.

An addendum in the fuel contract allowed the city to renegotiate the locked in price after January 31.

The city gambled again.

This time they chose to go with a cheaper floating rate but agreed to buy a set number of gallons.

" We project to save at least another $700 thousand  as long as the rate still stays around $1.80 mark," said Adams.

Adams said  they were staying with the floating rate for now but the fuel rates are monitored daily.

They said when gas prices start to trend higher, negotiators will lock in a set rate so they can control the city`s fuel budget and how much it`s costing you the taxpayer.

Notice: you are using an outdated browser. Microsoft does not recommend using IE as your default browser. Some features on this website, like video and images, might not work properly. For the best experience, please upgrade your browser.