Everyone has been hit by rising fuel prices, but imagine if you relied on gasoline to run your business. All of Rhode Island — all of America — has been affected by the recent rise in gasoline and oil prices. The hardest hit are people in the transportation business. Cities and towns, trucking companies, bus companies, and cab companies are all struggling to adjust to new fees.
A giant company like United Parcel Service simply absorbs the costs of gas, said Dan McMackin, a UPS spokesperson. Absorbing the costs may cause some loss of money, but it also ensures that UPS will not pass a surcharge to its customers.
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UPS has the good fortune — or good management — to be somewhat safeguarded against the increase in fuel costs. They have a system for buying gas they call “hedging.” In a “hedging” arrangement the company buys its fuel in bulk based on a contract with the fuel company. The price for the gas is set during negotiations and remains that price for the life of the contract. UPS contracted for fuel prices two years ago. Despite this safeguard, even UPS has taken steps to combat the rise in gas prices.
No idling those UPS trucks
To save on gas UPS has a few regulations that help. One is called “driver mapping.” This involves a satellite system that maps drivers’ routes. If two drivers cross paths, they are told that they need a new route to save fuel and time. Also, UPS has the largest number of non-government alternative fuel vehicles. Over 1,000 of UPS’ 87,000 vehicles are run on compressed natural gas. UPS is working on another hybrid vehicle that will run on both diesel fuel and electricity. To save on gas for its airplanes, UPS monitors airport gas prices so its planes do not fuel up in the most expensive cities. Lastly, a strict rule that McMackin said makes a big difference is that trucks are not allowed to idle while drivers are making deliveries.
UPS is still spending a lot of money on fuel, though, and McMackin said the company would raise its prices before they start laying off employees.
Buses, cabs hit hard
At Westwood Cartage, Inc., a trucking company in Cranston, they have been dealing with increases since September when heating oil and gas went up. The trucks there run on diesel fuel. David Roche of Westwood Cartage said the company is paying about $670 dollars more a month on fuel, per truck.
Roche said because of the cost of gasoline, everything related to it has increased in price. Westwood charges more for a shipment now, so the goods they are transporting are being sold for more to make up for the increase, and so on down the line. People are just accepting the increase in price, Roche said.
Roche determines how much he will charge based on the national fuel average put out every week on Monday at 4 p.m., making the price of hiring the trucks of Westwood Cartage vary from week to week.
In a similar situation is Paul Barone from Gray Goose Line charter buses in Providence. He too has had to work with the higher fuel prices. The Gray Goose buses run on diesel fuel. Gray Goose charter buses have had to pay about 45 cents more a gallon. It’s difficult for a charter company because it cannot shorten its route – Gray Goose must go where its customers want to go.
Gray Goose has also increased its prices, Barone said, but not drastically.
“Overall you are going to have people who try to make money (from the increase), but if people want to keep their customers they won’t overcharge,” he said.
Barone thinks that the new gas prices are a permanent escalation, rather than a temporary rise. He does not utilize the national fuel average because he buys the fuel in bulk, not weekly, and only charges what he pays, not what the average is for the week. Barone also cannot change fees for a charter bus that he has already locked down in price. If someone hires a bus a month in advance, and fuel prices go up again, Barone said he does not tell that person to pay him more.
Pamela Fisk at Apponaug Cab Inc. seems to be having the hardest time. Because the cab rates are regulated by the state, she cannot charge a higher fare.
This is getting to be a problem for Fisk because she is paying up to $30 a week more on gasoline, especially on cabs that only run on premium fuel. Fisk is trying to cope in other ways.
In the office, Fisk said, the air conditioner is often off. Fisk would like to hire some new people, but cannot because of money constraints. Apponaug also said they have to change their routes to make up for the new expenses. On the bright side, Fisk is not experiencing any lost business.
The only ones that appear to be not overly concerned with the increase in cost are the cities and towns.
Municipal budgets may jump next year
Paul Lemont, city manager for East Providence, has a rather philosophic approach. “Prices go up and prices go down,” he said. He also said that since the city has good management, it is not severely affected. The city pays for gasoline that runs garbage trucks and what Lemont calls the “fleet,” meaning police cars and fire trucks. Of course, Lemont says, there will be an increase in the transportation budget next year, but it will not be anything extreme.
Peter DeAngelis, director of public works in the Town of Barrington, said the town will have to increase next year’s transportation budget.
Smithfield is adjusting budgeting as well, according to Caroline Carlton, a member of the town’s planning board.
UPS and the public departments are planning – and hoping — that gas prices will go down. Westwood Cartage and Gray Goose Bus Lines think of the high cost of gas as a more permanent increase, rather than just a spike in price. But no matter what the attitude towards it is, all of these places have had to make adjustments and any business or public facility that needs gas to run, is affected.
