TfL and Oil Costs

Meeting: 
MQT on 2015-01-21
Session date: 
January 21, 2015
Reference: 
2015/0318
Question By: 
Murad Qureshi
Organisation: 
Labour Group
Asked Of: 
The Mayor
Category: 

Question

How much is Transport for London saving as a result of the recent dramatic fall in oil costs and how will passengers benefit from these savings?

Answer

Answer for TfL and Oil Costs

Answer for TfL and Oil Costs

Answered By: 
The Mayor

The cost of fuel represents a relatively small proportion of the overall cost of running bus services in London. Fuel costs are less than 15 per cent of the total bus service cost.

One of the benefits of the tendering system in London is that the operators take the risk in managing short-term changes in their costs. This includes when fuel prices are rising, which has been the more general trend in recent years.

Most of London's bus operators have in place fuel hedging arrangements locked-in for the next 12 to 18 months at any time. This means the bus companies may not see any immediate benefit from the reductions in the cost of fuel. The same is true when prices rise.

The reductions in fuel costs would need to be significant and sustained for a considerable period of time to have a noticeable impact on Transport for London's financial position, and consequently bus service contract costs.