Add fast-rising fuel costs to the list of challenges that HVACR contractors face today.
Retail gasoline prices in the U.S., which have been going up steadily for much of the past year, hit a nationwide average of $4.25 a gallon on March 9, an increase of just over 22% from a month earlier, when the price averaged $3.47 a gallon, according to AAA. Among the 50 states, average prices on March 9 ranged from a low of $3.79 a gallon in Kansas to a high of $5.57 a gallon in California, according to AAA.
The March 9 average was 53% higher than a year earlier, when the nationwide per-gallon average was $2.77.
With the Russian invasion of Ukraine and President Joe Biden’s decision to ban oil imports from Russia in response, prices aren’t expected to come down any time soon.
“We do not see this being resolved in the foreseeable future given the current geopolitical state of the world,” said Chris Czarnecki, government relations manager at Air Conditioning Contractors of America (ACCA), in an email. “We hope we are wrong, but we believe this is something we will be seeing and dealing with for some time.”
Ultimately, Czarnecki said, contractors will be forced to raise prices to cover the added costs. Some already have.
For contractors already coping with a supply-chain slowdown, a labor shortage, and an inflation rate that’s at a 40-year high, runaway fuel costs are adding to their woes.
“Fuel prices will have to be passed along as well to the public,” Scott Merritt, owner of Fire & Ice Heating and Air Conditioning Inc. in Columbus, Ohio, said in an email. “You either squeak out a profit during these turbulent times even if you are doing less jobs, or you shutter the doors.”
Fire & Ice has a fleet of 35 vehicles, all of which run on gasoline. Merritt said he’s considering a $10 hike in the company’s diagnostic fee in order to cover fuel cost increases.
“It’s just another part of being in business,” said Gary Marowske, president of Flame Heating, Cooling, Plumbing, and Electrical in Warren, Michigan, said recently by phone. “If it was easy, everybody would do it.”
Marowske said the higher prices have cut into profits. Flame’s fleet of about 90 work vehicles consume between 10,000 and 12,000 gallons of gasoline a month.
“You can do the math,” he said. (The math: A 78-cent increase, like that seen nationally over the recent one-month period, multiplied by 12,000 gallons equals a monthly increase of $9,360.)
At Sky Heating, AC, Plumbing & Electrical, in the Portland, Oregon, area, President Travis Smith said his company’s fuel bill jumped from about $17,000 in January to about $22,000 in February.
Part of that, Smith noted in a phone interview, was because Sky had more service calls in February than the month before. But business was even brisker in December, when the fuel bill was only about $15,000, he said.
Sky has about 60 vehicles in its fleet, Smith said, including eight diesel-powered vehicles. (Diesel prices nationwide averaged about $4.88 a gallon on March 9, a nearly 27% increase from a month earlier.)
While some contractors are reportedly implementing fuel surcharges, both Marowske and Travis said they won’t go that route.
“If any price is going to go up, it’s just going to be in the flat rate,” Smith said, who described himself as “not a believer” in fuel surcharges. “I just find that a recipe to piss off and annoy customers.”
At Minnick’s Inc. in Laurel, Maryland, Rob Minnick, CEO and president, agreed.
“I stay away from surcharges, as less is more,” he said in an email. Minnick’s has nine work vehicles that use about 600 gallons of gasoline a month, he said, and prices have been raised by 5%.
Marowske said he wouldn’t consider switching to electric vehicles even if gasoline prices stay high in the long term. The savings on fuel, he said, wouldn’t make up for the capital outlay. Minnick, however, said he’s planning to move his business to EVs within one to three years. Smith wouldn’t rule out a switch.
“It’s certainly possible,” Smith said. The biggest challenge, he said, would be figuring out how to charge them. “That becomes a major conundrum for me on the land side,” he said.
Sky had one EV until recently, Smith said. It was used by the service manager on a trial basis.
“There was definitely a lot of range anxiety,” he reported.
Minnick and Smith aren’t alone, said ACCA’s Czarnecki.
“We have been hearing from our members and corporate partners that more inquiries are being made on the availability of electric vehicles,” he said. That was expected, he added, because some automakers recently announced plans to produce more electric vehicles.
The current fuel situation is a minor concern, Smith said, compared to some of the other issues HVACR contractors are facing. He said he’d rather focus Sky’s energies on “the same thing as always” — taking care of customers — rather than worry about fuel prices.
“If we focus on trying to save a dollar everywhere, we’re going to lose that $10 we could’ve made,” he said.
Czarnecki said member contractors can take advantage of ACCA’s Savings4Members program, which enables them to obtain fuel cards that offer savings of up to 15 cents per gallon on fuel purchases.
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