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Fuel Costs – Are They a Killer or What?

June 12, 2000
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I know I’m preaching to the choir when I say that I’m cheesed off about the current fuel prices. I don’t like the idea of being held hostage by artificial gas prices, arbitrarily set by oil producers who seem hell-bent on making obscene profits or changing the energy usage patterns of fuel consumers.

On second thought, forget about the latter. I don’t think any oil baron wants us to change our usage habits. But if that happens, watch the price of gas to return from the stratosphere and back to “normal.”

I put that in quotes because normal has different meanings in geographic areas of the country. My brother-in-law, who lives in the Milwaukee area, recently filled up his van at $1.81 a gallon. I felt guilty crying about the $1.55 I was paying at the time in the Detroit area.

I remember as a young man proudly driving around in my 1964 Ford Falcon and buying gas for 19 cents a gallon. That’s not a misprint — nineteen cents a gallon. Prices got that low during a price war between neighborhood gas stations. But keep in mind that I grew up in Detroit, where the price of gas is usually lower than most areas in the country.

I average about 85 miles a day, which comes to around 35 gallons a week based on my mpg and the fact that I do as little driving as possible on Sunday. So, a year-and-a-half ago I was paying 99 cents a gallon, which means my weekly fuel bill was $35. The last time I filled up I was paying $1.75 a gallon, which is about $61.25 per week.

Averaged out over a year and the difference is $1,365. Now multiply that by the number of vehicles on the road. Do you get the idea that someone is laughing all of the way to the bank? Before I get e-mails and phone calls about driving a fuel-efficient car, I drive a mini-van that transports kids, garage sale items, camping gear, etc. around. So, no wisecracks, OK?

What we sometimes don’t see are the related costs that go with a fuel price hike. It costs more to ship goods over the road and in the air. Food prices go up as do hard goods prices because they cost more to produce and ship — thanks to higher fuel prices.

And we’ve already seen increased prices in airfare for passenger airlines. I believe it is called a “fuel surcharge.” Cha-ching, my friends.

I’m sure these higher prices have to be putting a kink in some of your budgets. Look at the contractor who has a fleet of 50 or 100 trucks. You do the math — the increased fuel costs have to be mind-boggling.

Will these expenses result in higher costs for your services? It seems inevitable. Will you be able to hold the line on price increases to your customers until you can readjust your rates or until flat-rate pricing takes these costs into consideration — if it is done at all?

Beyond the price of fuel, has anything else affected your cost structure in the past year? Do you have to pay a competitive wage to pull workers out of a shrinking job market? Have taxes or rent increased steadily? What about the higher interest rates? Are you being held back from capital improvements because of interest rates?

I’d like to know. If it affects your bottom line, I’d like to know.

I’d also like to know where I can find gas for 99 cents a gallon. Any suggestions?

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