Lower fuel prices than expected have wound up saving Kitsap Transit $550,000 last year. And fuel prices continue to fall for the public transportation authority, which uses a fleet of buses, vanpools and ferries to carry four million riders annually in Bremerton and Port Orchard area.

In January, KT paid $1.61 per gallon for diesel fuel, compared to $2.09 in December — both months much lower than the $3.75 per gallon that KT had budgeted for.

The group is able to get the lower fuel prices by buying in bulk — 10,000 to 20,000 gallons at a time. The fuel is purchased from the state, which bids out for contract pricing.

“It’s not only discounted but we’re also exempt from a lot of the taxes that are put on so the price that we pay is normally much lower than the price per gallon on the pump,” said Kitsap Transit Executive Director John Clauson.

He said the savings will go into their reserve fund.

Fuel for the ferries that run between Port Orchard and Bremerton, and for the vanpool, however, is purchased at or near market rates.

KT burns about 728,000 gallons of fuel per year for all modes of transportation and spends around $2.3 million in fuel annually.

KT tracks average diesel fuel prices each month. In 2014, prices range from a low of $2.09 in December to a high of $3.10 in June. The average fuel price for 2014 was $2.89.

KT paid an average of $2.27 in 2007, $3.07 in 2008, $1.75 in 2009, $2.32 in 2010, $3.13 in 2011, $3.26 in 2012 and $3.09 in 2013.

The last time KT averaged $1.61 per gallon or less was in May of 2009 when the price also averaged $1.61.