Diesel fuel volatility tied to possible Metra fare hikes

The cost of diesel fuel could make the difference between whether Metra riders see a fare increase or not in the coming months.

Last week, Chief Executive Officer Alex Clifford anticipated calling a special meeting to address skyrocketing diesel costs.

But a recent dip in prices has the agency holding its breath for at least 30 days. Clifford told Metra directors Friday he’d brief them at the June meeting if drastic action is needed to plug a $19 million budget hole.

Although the agency had budgeted for around $2.25 a gallon, diesel jumped to $2.82 in February and continued up through April at $3.33. The average price per gallon of diesel this month is $3.24 and if it remains at that level, Metra will be $19 million over budget by the end of the year.

“We cannot absorb that, it’s too large a number,” Clifford said.

But “given what’s occurred with fuel prices turning downward, we need to see if what’s occurring is the beginning of a trend or an anomaly.”

If fuel continues to stay high, the agency will have to consider fare increases or service cuts.

But if the numbers continue to dip, Metra could handle the deficit with a combination of internal cutbacks along with sales tax revenues, which were higher than expected in 2010 and in 2011.

“We’ll do everything we can to make sure we contain costs at our end,” Clifford said. Board Director Paul Darley, of Elmhurst, asked if the agency would consider fuel hedging, in which it locks in a fixed price for diesel for a specified time.

Metra attorneys are looking into whether the agency can engage in hedging and will report back in a few weeks, Clifford said.