Chicago fuel bet goes awry

The Chicago Transit Authority put down a $102.8 million bet on fuel prices for 2009 and so far has come out behind, a transportation research expert said.

They hedged and they gambled and they lost, said Robert Paaswell, a former head of the CTA and current director of the Transportation Research Center at City College of New York.

The CTA hedged the entire fuel bill for the year, locking in prices at $3.80 a gallon for diesel, the Chicago Sun-Times reported Monday.

But, prices dropped. The current price for diesel fuel is $2.29 a gallon, the newspaper said.

CTA Chairwoman Carole Brown also said she was comfortable with the hedge, in spite of a $242 million CTA budget shortfall.

We can’t bargain shop for something as critical as fuel costs, Brown said. Sometimes the lack of uncertainty is worth a lot.

With diesel fuel approaching $5 a gallon last summer, they made a bad deal, but you can see why they did it, said David Sykuta of the Illinois Petroleum Council. They probably figured if they could lock in anything under $4 they were miles ahead.