Summary
The U.S. Postal Service (the Service) is dependent on fuel to support its mail delivery and transportation networks, as well as to heat and operate the over 34,000 postal facilities it occupies. The Service has been challenged by recent fuel price fluctuations, and the Postmaster General stated that gas prices were a primary reason for the proposed 2007 postal rate adjustment. Based on this challenge, Congress asked GAO to review (1) how the Service's fuel costs changed recently and the impact of these cost changes on the Service's financial and operating conditions, and (2) how the Service's actions to control fuel costs and mitigate risk compare to leading practices and federal requirements. GAO collected fuel cost and price information; interviewed Service fuel officials; and compared the Service's actions against leading practices and federal requirements.
The Service's transportation and facility fuel costs have grown in recent years as fuel prices, particularly for gasoline, diesel, and jet fuel have increased. For example, fuel cost growth for its vehicle fleet was due to rising prices rather than consumption. While fuel costs have directly pressured its financial condition, increasing compensation and benefits were the primary driver of the $3.4 billion operating expense increase in fiscal year 2006. The Service absorbed fuel cost increases through costcontainment efforts and increased revenues from the January 2006 rate increase, allowing it to achieve net income for the year. Nevertheless, the Service remains vulnerable to fuel price fluctuations, due in part to its purchasing process, which involves buying fuel as needed, often at retail locations. The Service is challenged to control fuel costs due to its expanding delivery network and inability to use surcharges. GAO found some of the Service's actions to control fuel costs to be generally consistent with procurement and consumption practices advocated by leading organizations and federal requirements for purchasing alternative fuel vehicles. However, GAO also identified areas where more actions could be taken. Taking actions to address data inconsistencies will be important, even as the Service develops a new energy strategy. These inconsistencies will limit the Service's ability to understand consumption changes and impacts and where to target potential cost-saving opportunities. Furthermore, additional progress is needed in reducing reliance on petroleum-based fuels because of the more stringent federal fuel consumption requirements that were recently passed.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Katherine A. Siggerud
Government Accountability Office: Physical Infrastructure
(202) 512-6570
Recommendations for Executive Action
Recommendation: The Postmaster General should take actions to improve tracking and monitoring of transportation and facility-related fuel consumption data. Taking immediate actions to address the lack of consumption data will be important, even as the Service is developing a new energy strategy.
Agency Affected: United States Postal Service: Office of the Postmaster General
Status: In process
Comments: The Service agreed with our recommendation to improve the tracking and monitoring of transportation and facility-related fuel consumption data and has taken actions to do so. In November 2007, the Service began the Utility Management System Pilot Project to capture consumption and cost data for electricity, natural gas, and fuel oil used in major USPS facilities. For 600 facilities (about half of its total building energy costs), cost and consumption information have been successfully gathered and efforts are being made to obtain historical information on these accounts. USPS said that if the pilot is successful, the process will be rolled out nationally. On the transportation side, USPS provided us copies of reports that Vehicle Operations uses to track Postal Fleet - Bulk Fuel gallons and spend, as well as copies of detailed fuel reports of monthly and year-to-date spend and consumption data that were implemented in October of 2007. In April 2008, USPS also started tracking alternative fuel use (E-85, Biodiesel, and CNG). However, USPS noted that transaction data for alternative fuel purchases is likely to be understated due to the wide variability in the accurate reporting of product codes at the point-of-sale. Also, USPS is still trying to track down a reliable "source" for domestic water spend data and hope to have that field completed soon.
