Rising fuel prices could see up to 40 local authorities forming a consortium to bulk buy oil on the future’s market.

Kent County Council is to host a meeting between interested local authorities in late October where the benefits of purchasing in bulk – when conditions are deemed advantageous and savings could be made when the price of oil rises – can be discussed.

The possible risks, such as councils being bound into expensive prices, will also be on the agenda. The Southeast Improvement and Efficiency Partnership (SIEP) is in discussions with councils over plans to begin futures trading.

Kent said a large county currently pays around £1.15 a litre for diesel while parts of the haulage industry, which bulk buy on the open market, get their diesel for around 90p.

Kevin Harlock, head of procurement at Kent CC, said the council would need to purchase at least 80m litres to secure a lower price. Kent’s annual consumption is currently 18m and Mr Harlock said: ‘We need to create a critical mass of demand in order to influence the price and make the savings we need.’

Local Government Association research earlier this year revealed the rising prices of oil, petrol and diesel had increased councils’ costs by £239M over the past two years (Surveyor 10/07/2008).

As much as £780M is expected to be spent fuelling refuse lorries, gritters, meals-on-wheels vans and other vehicles this financial year.

Councils in the Northeast face a collective £1bn increase in their fuel bills and Newcastle City Council, which estimates its fuel bill this financial year will rise by almost £400,000 to £2.12M, is planning to attend the summit.

Cllr Peter Allen, who sits on the Newcastle procurement committee, said: ‘There are always risks involved and if we buy at a set price that seems cheap, there is nothing to say the market will not change and prices go down in the future.’ The North East Purchasing Organisation is monitoring the arrangements.