(Register-Guard, The (Eugene, OR) Via Acquire Media NewsEdge) Nov. 30–Gas prices in the Eugene-Springfield area topped $4 a gallon for most of the summer. Now, just a few months later, prices are less than half that.
But local businesses say that, unlike the average motorist, they haven’t seen much benefit from lower prices at the pump. They’re still stuck paying fuel surcharges for freight, several business people said. Plus, their other costs of doing business continue to climb, and business, in general, is slowing because the economy is mired in what many are now calling a recession — all of which outweighs any benefits from lower fuel prices.
The federal government recently issued an estimate that the average price for regular gas next year would be $2.37 a gallon, she said.
“Lower fuel prices will probably be the norm — at least through the end of the year and into early 2009,” Dodds said. “The thought is that gas prices are basically along for the ride with what’s happening with the general economy. When the economy starts to rebound, it’s likely that gas and oil prices will go back up again.”
So where does that leave local businesses? Not much better off than when fuel costs hit record levels, many of them say.
“We’re doing a little better with expenses in the gas end,” said Mike Gregory, who owns Sunshine Limo Service in Eugene, with his wife, Cheryl. But business has slowed a bit, especially in the Portland market, where operators are responding to slackened demand by lowering their prices, he said. “So I’d say, if anything, it’s a wash,” Gregory said.
On all its runs, Sunshine Limo charges a fuel surcharge of 7 percent of the total bill. Gregory said for years he charged 5 percent, but increased it when fuel prices topped $2 a gallon. When gas prices peaked this summer at more than $4 a gallon, Gregory bumped up the fuel surcharge to 10 percent on longer-distance runs, north of Junction City or south of Cottage Grove. But now it’s back down to 7 percent, he said.
If gas prices hold below $2 a gallon, the surcharge could go down to 5 percent. “But I have my doubts,” Gregory said.
This past month, the limo company’s gas bill dropped by about $1,000, but that’s partly because overall business is down, Gregory said.
“It’s nothing to get panicky about,” he said. “It’s just something we’re keeping a keen eye on.”
Cummings Moving Systems, a Mayflower agent with about 10 employees in Eugene, doesn’t get to set its own fuel surcharges. They’re determined by state regulators on trips within Oregon, and by the federal government on trips across states.
Over the past year, those surcharges have been changing about quarterly, said Dan Street, Cummings’ vice president of operations in Albany.
Surcharges for moves in Oregon peaked at about 6 percent of total costs, and are now at 2 percent. Surcharges for inter-state moves probably went as high as 21 percent this summer, and now are at 4 percent, Street said.
Of greater concern than fuel prices is the overall state of the economy, Street said. Most companies aren’t expanding or hiring, and Cummings’ corporate customers aren’t moving employees around as frequently as they did when the economy was booming, he said.
Managers at GloryBee Foods, a Eugene natural foods distributor, considered adding a fuel surcharge about a year ago, but decided against it, operations manager Alan Turanski said.
GloryBee has its own biodiesel trucks, which travel on 21 routes every week throughout Oregon and Washington, he said.
GloryBee’s prices have always included delivery, Turanski said.
“We just bit the bullet in feeling like things would balance out,” he said. “If we needed to increase our prices of our products to cover (higher delivery costs), we would. But (in general) we’re not going to add a fuel surcharge, because it’s kind of a hassle for our customers.”
It’s unclear what effect distribution costs will have on GloryBee’s overall prices.
Each fall GloryBee reviews its pricing and publishes a new catalog. The company did that this year, but it’s in the unusual position of needing to issue a supplement at the end of the year or early next year, Turanski said.
“Right now commodity prices are tanking for a lot of items, so we can’t see where it’s all settling out,” he said.
Another food distributor, Inderbitzin Distributors, based in Puyallup, Wash., has a five-employee warehouse in Eugene, and delivers snack foods to convenience stores along Interstate 5 from Canada to Roseburg.
The company added a small fuel surcharge when gas prices skyrocketed, which “did not even cover what we should have done,” President John Inderbitzin said. So there’s been no great windfall as fuel costs have dropped. Now, the company is watching to see where gas prices go next year.
“If fuel stays down where it is now, we’ll be fine,” Inderbitzin said.
“But if it goes back up to where it was, we’ll have to react sooner.”
If fuel prices escalate next year, “we may have to raise prices on some products,” he said, adding that many stores don’t like fuel surcharges because they can’t break out the price per product.
Record gas prices in the summer prompted Inderbitzin to restructure its routes to be more fuel efficient.
“We’re keeping (those) now because we know it’s just a matter of time before the prices go back up,” Inderbitzin said.
High fuel costs also nudged the company to look into global positioning units. The company plans to install the devices on each of its trucks early next year, he said.
“We want to save more on the fuel and keep better track of our trucks,” Inderbitzin said.
The run-up in fuel prices earlier this year forced other businesses to restructure. Many business managers said they’re unlikely to return to their old ways of doing business because the fuel-saving measures they’ve implemented are better for the environment, and the main factor behind falling gas prices — the national economic malaise — is hurting businesses in other ways.
Chuck Buster, owner of 12-year-old Sunshine Delivery Service in Springfield, said he’s down to a one-man operation and doesn’t see that changing any time soon.
A few years back he had the equivalent of four or five full-time employees. Most of his deliveries are for florists, which have slowed along with the economy.
“I just reorganized my business in such a way that I can kind of roll with it and stay alive,” Buster said.
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