ACHRNEWS

Contractors Confront Climbing Gas Costs

May 14, 2012
technician checking oil on service van
Gas prices have been well above the $3 per gallon mark for over a year now, but in the last few months, they’ve climbed to $4-plus per gallon, which is where they are likely to stay for the near future, according to the U.S. Energy Information Agency (EIA). The agency predicts that during the May-through-September summer driving season this year, regular gasoline retail prices will average about $3.95 per gallon, peaking in May at a monthly average price of $4.01 per gallon.

This is not good news to the numerous contractors whose profit margins have already been battered by the weak economy. But contractors are nothing if not resilient, and in response to escalating gas prices, many are becoming creative in the ways in which they are trying to reduce their fuel consumption.

Eliminating Idle Time

When gas prices spiked several years ago, Isaac Heating and Air Conditioning, Rochester, N.Y., began equipping its service vehicles with GPS in order to better track how the vehicles were being used. While the GPS provided a number of useful reports, one that slipped under the radar until recently was the idle time report, which provided detailed information on just how long company vehicles spend idling.

Being located in a northern climate where temperatures are often below freezing from November to February, Eric Knaak, vice president of service, expected his technicians to warm up their service vehicles for 10 to 15 minutes in the morning in order to defrost the windshield. However, he was surprised to find that the idle report showed many situations in which vehicles were idling for 30 or 40 minutes, and he saw an opportunity to save fuel.

“I realized that some of our technicians might have logical reasons for letting their vehicles idle, so I needed to make sure that I knew how long a vehicle had to idle in order to melt the ice on the windshield and put the vehicle at a comfortable temperature,” said Knaak.

So on a frigid winter morning, Knaak took a spare vehicle that had been sitting idle for a few days outside and placed two temperature probes in the cab that monitored the air temperature once the vehicle was turned on. “I found that on a 14˚F day, a vehicle with a cold engine produced enough heat to defrost the windshield and bring the cab up to 40˚F in 14 minutes. I then turned off the engine and let the vehicle sit for 90 minutes, which is the duration of the normal service call. I found that a vehicle with a warm engine can bring the cab back up to 40˚F in less than 4 minutes and up to 50˚F in 10 minutes.”

Knaak shared these findings with the technicians and asked them to begin reducing their idle time as much as possible. He started running the idle time report daily, sending out friendly email reminders, and talking about reducing idling time in service meetings. After technicians got out of the habit of letting their vehicles idle for long periods of time, Knaak started to see the fuel consumption drop.

“We began the fuel conservation program during the first week of 2012, and from December to January, we reduced idle time fuel consumption by 21 percent and carbon emissions by 24 percent. From December to February, we reduced idle time fuel consumption by 55 percent and carbon emissions by 54 percent. The vehicles involved in the program account for about one-third of our total fleet of 135 trucks, and we plan to roll out this program to other departments in the near future.”

In addition to saving fuel, the company is using the results of its conservation program as a marketing tool. “We have posted the results of our fuel conservation program on our Facebook page, and we have sent it through our Twitter account to show our clients that we are doing what we can to save energy and help the environment,” said Knaak.

Price Increases Possible

Bel Red Energy Solutions, Mukilteo, Wash., also advertises its efforts to reduce fuel consumption (www.belred.com/about-us/how-we-live-and-work-greener). “We do everything we can to minimize fuel consumption, including using fuel-efficient vehicles, monitoring routing and driving speed with GPS, and conducting regular vehicle checks to ensure proper mechanical operation, tire inflation, etc.,” said Adam Gloss, vice president.

Gloss stated that it is the company’s responsibility to reduce fuel consumption; however, costs will ultimately be passed along to customers at some point. “We look at our fuel and vehicle expenses monthly as part of our financial reviews, and if we see that these costs are driving up our operating expenses for an extended period, we will adjust our pricing to ensure we remain profitable. We’re very careful about deciding when we need to make these increases, as we know the impact they can have on our customers.”

Jeff Lee, general manager, Mechanical Heating and Cooling, Dearborn Heights, Mich., relies primarily on GPS to maximize fuel consumption for the company’s 10-plus vehicles. “In addition, we confirm all appointments to eliminate wasted trips. Rising fuel prices are a concern, and we will consider other options such as price increases should gas prices continue to rise.”

GPS has also helped Flame Furnace, Warren, Mich., save fuel, as it allows the dispatchers to schedule calls based on location. “In addition, we monitor idle time through the GPS,” said Matt Marsiglio, service manager. “Fortunately, we budgeted for an increase in gas prices this year, as these rising costs have negatively affected our margins in the past. We watch it closely, because if the fuel cost exceeds what we have planned in our budget, we will have to take a look at imposing a fuel charge. We have done that in the past with little resistance from our clients.”

Marsiglio regularly talks with his technicians about rising fuel costs at service meetings and emphasizes the need to do simple things, such as make sure the service vehicle is properly tuned up and that tires are inflated properly for the best mileage. “We have also started utilizing smaller vans (transit vans) for service and parts delivery to take advantage of the better fuel mileage. When we replace our fleet, we may look into these vehicles for our maintenance technicians.”

Karen DeSousa, vice president, Advance Air and Heat Co., Inc., East Freetown, Mass., has researched retrofitting her company’s 16 trucks with a hybrid device that can supposedly reduce fuel consumption by 20 percent, but the upfront cost is prohibitive. For now, she says, they are increasing their vigilance on vehicle maintenance, as well as using a cash-back credit card for fuel expenses. “We also negotiated with one gas station to give us a discounted rate for gas if they were our provider.”

However, if gas prices continue to increase, noted DeSousa, the company will have no choice but to impose a fuel surcharge. “With economic pressures limiting our ability to increase our prices, the higher cost of gas has definitely reduced our profit margin. I wish we had a magic bullet to help us deal with increasing fuel costs, as they affect every aspect of the economy, including the cost of equipment, tools, and supplies.”

Rising gas prices are putting the squeeze on businesses around the U.S., but with a little creative thinking, it may possible to shave off a few pennies here and there, which can add up to significant savings — and a healthier bottom line.

Sidebar: Fuel Recommendations

With gas and diesel prices hovering near $4 per gallon nationally, fleet owners are bracing for an expensive summer. The damage can be mitigated, cautions Steve Eppinger, if fleet owners and operators implement focused strategies that target excessive fuel consumption. Eppinger, founder and CEO of Ownersite.com, the cloud-based vehicle asset management platform optimized for small-to medium-sized fleet owners, offers the following strategies for fleet owners alarmed by the spike in fuel prices.

• Look at MPG reduction potential cumulatively, not individually. The MPG loss from an out-of-tune engine (4 percent), underinflated tires (1.5 percent), and the wrong oil (1.5 percent) combined is greater than driving at high speeds 20 percent of the time (6 percent). Run with increased rolling resistance tires and you’ll net another 4 percent increase in MPG for a total of 11 percent.

• Evaluate fleet vehicles as a group and not just individually. Rank vehicle fuel economy (compared to what you expect) and then examine the worst underperformers more closely. If two 2006 Ford Econoline vans are 25 percent apart in fuel economy, the poorest performer — or its driver — needs serious help.

• Track mileage with each fill-up individually, not just averaged over time, to pinpoint the underlying causes of bad fuel economy. Reasons for poor MPG can be very specific. For example, a driver who fills in on the weekends may have a lead foot or not know how to use the GPS efficiently, throwing off a vehicle’s figures for the entire week.

• Get help in the form of tracking software. It’s not easy to stay on top of fuel-saving strategies unless you run an easy-to-use (preferably mobile) vehicle maintenance and management solution. The best programs not only track mileage and remind you to do important maintenance, they also generate reports that help you identify problems.

Publication date: 05/14/2012