Bangor denies BIA fuel contract transfer

Posted Jan. 26, 2009, at 10:46 p.m.

BANGOR, Maine — The city denied a request Monday to transfer the fuel contract at Bangor International Airport from ExxonMobil Corp. to one of the company’s main distributors, Western Petroleum Co.

ExxonMobil, which has held a fuel agreement with BIA for more than 30 years, informed the city last year that it would suspend that contract in response to a change in state tax law. More specifically, the company claimed that alterations to Maine’s Unitary Income Tax law resulted in a significantly higher tax burden for the fuel giant, according to City Manager Edward Barrett.

As a show of good faith, ExxonMobil offered the city a chance to hand over its contract to Minnesota-based Western Petroleum, which works closely with ExxonMobil and had expressed interest in BIA. Western Petroleum has supplied fuel for many years to the Maine Air National Guard base that is adjacent to the Bangor airport.

City and BIA staff took a close look at Western Petroleum and even met with representatives on multiple occasions dating back to last fall. From the beginning, they had reservations and ultimately determined that offering a contract to the firm would not be in Bangor’s best interest.

On Monday, city councilors unanimously agreed.

According to councilor Susan Hawes, the request was denied because Western Petroleum had insufficient experience dealing with airports of BIA’s size and because it had little control over potential fuel cost increases. Councilors feared that any increases would financially cripple the airport at an already stressful time.

Now, the city must go back to the drawing board to come up with an alternative by the time ExxonMobil’s contract officially expires in July.

Barrett said the city is leaning toward an agreement in which each airline served by BIA purchases its own fuel and then pays a fee to the airport for storage of that fuel.

“In the research we’ve done, that has really become the preferred method,” the city manager said.

By allowing each airline to negotiate its own fuel costs, Barrett said costs likely will decrease because of competition. Those savings then could be passed on to passengers.

“We’ve had a long relationship with ExxonMobil, and it’s one that likely would have continued if not for the change in state law,” Barrett said. “We still have a lot more research to do before we decide what the alternative will be.”

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