Potter: Higher Fuel Costs Hurting USPS

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Postmaster general John E. Potter warned that the drastic increase in fuel costs is harming the USPS.

His remarks came during the U.S. Postal Service's Board of Governors meeting earlier this week in Washington.

"With a fleet of more than 210,000 vehicles that cover a billion miles every year," Potter said, "high fuel prices hit us hard."

USPS vehicles consume 800 million gallons of gasoline and diesel fuel annually.

"Since January, regular gasoline costs have climbed about 38 percent," he said. That increase produced spending of about $80 million above what the postal service had budgeted.

Potter also noted that high fuel prices have increased heating and electricity costs for the postal service's 38,000 facilities. Despite cost reduction efforts that offset much of the increase, "continued increases will have an adverse impact on postal finances."

Mailers last week said they are growing concerned about how rising gas prices will affect the next postage rate increase, which most likely will occur in 2006.

"It will be interesting to see the impact of gas prices in the next rate case," said Ellenor Kirkconnell, assistant director at the Alliance of Nonprofit Mailers, Washington. "If this is a long-term price hike, a large amount of money will have to be passed onto the rate-payers."

Potter said the USPS would lease a fuel cell vehicle from General Motors Corp. to deliver mail in and around the nation's capital. Hydrogen fuel cell-powered vehicles convert hydrogen and oxygen into electricity for power.

Thomas G. Day, the USPS' vice president, engineering, who also spoke at the meeting, said the postal service sees this as an important test for GM's fuel cell vehicle.

"The ever-increasing cost of fuel and the need to protect our environment highlight the need to move forward with this initiative," he said.

The USPS uses 30,000 alternative-fuel vehicles to deliver mail.

The postal service begins using the fuel cell minivan in September as part of a two-year agreement.

Also at the meeting, board chairman S. David Fineman said that the governors are continuing to study the recently introduced House and Senate postal reform bills.

Fineman also said the board will get a two-hour presentation in July from postal management on the agency's Network Integration and Alignment program that will redesign operations and transportation networks and close some facilities and annexes.

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