The city of Richmond probably pays less per gallon for gas than you do, but Chief Financial Officer Harry Black thinks there's still room to shop smarter.

He's planning to ask for suppliers to bid on a new kind of contract, with a formal request to hit the street in 60 to 90 days.

The idea is to move away from the current practice -- in place for years -- where the supplier quotes a price that is an agreed-upon markup above a publicly posted "rack" or wholesale price quoted for delivery in Richmond from the pipelines that run through the region.

"But gasoline prices can change hourly," Black said. "We're looking for a strategic partner who can help us buy in a more businesslike way."

Richmond is a big buyer -- 2.3 million gallons of gasoline and diesel last year -- and Black believes that's enough fuel to make volume discounts and long-term purchases at fixed prices possible.

GRTC Transit System has locked in a $2.61-a-gallon price for its diesel fuel through a 12-month contract that runs through next April, said John Lewis, chief executive officer. That's well below the $3.81 a gallon he saw the last time he checked the local rack, he added.

A worldwide, multibillion-dollar commodity futures market in gasoline and oil makes such deals possible, Black said.

In those markets, traders and speculators buy and sell contracts for the future delivery of oil and gas.

While for the most part only money rather than fuel changes hands, potential profits on the paper deals can offset losses if the price of a long-term contract ends up varying widely from actual market prices. That ability to hedge risks makes long-term, fixed-price supply contracts possible.

But the city would not play the futures market, Black said. That's best left to people who are in the business.

Rising fuel prices have hit the city hard.

As of March, it had already spent more than the $3 million called for in its budget for the fiscal year ending June 30. Next year, city officials expect the bill to exceed $4 million -- double the level from five years before even though it's still well below $2 a gallon.

The school system has budgeted $1.9 million in fiscal year 2008, up from $751,000 in fiscal 2004.

Contact David Ress at (804) 649-6051 or dress@timesdispatch.com.