Gas prices loom large

Rising gas prices have led to increased costs for<br>other goods and services.
Rising gas prices have led to increased costs for
other goods and services.

With prices at the pump rising, the cost of other goods and services also go
up as trucking companies charge higher fuel surcharges and shippers pass the
cost along to consumers.



The national average price consumers pay for gasoline hit a record at $1.77 a gallon on April 6, AAA reported. The price is 5 cents a gallon higher than a month ago and more than 13 cents higher than a year ago, according to the automobile association.



“It’s hard to predict if the prices will continue to rise. Traditionally, prices start to go up around Memorial Day, peak around the Fourth of July and stay that way through Labor Day,” AAA spokesman John Paul said. “What we are seeing now is the prices are going up too soon too quickly. … The price of crude oil is going down, so gasoline prices could stabilize, but historically, prices are highest in the summer.”



In addition to costing consumers more to gas up their cars, when fuel prices increase, it costs more to move goods and those prices often increase too. Freight moving companies, like FedEx Freight, charge shippers a “fuel surcharge” that changes each week depending on the price of fuel.



A company moving $500 worth of freight may charge half of one percent for fuel, depending on the national percent the price has increased, to offset costs, Rhode Island Trucking Association President John Atwood said.



“When they can, trucking companies pass a fuel surcharge on to shippers – not that the shippers always pay it – it’s a very competitive market, so a shipping company might jump on board with another truck that isn’t charging extra so they don’t have to pay,” Atwood said. “In Rhode Island, we have the third-highest fuel tax in the country, then add the federal fuel tax on top of that; it’s a tough market.”



Shipping companies that do pay the fuel surcharge normally pass it on to consumers, he said.



“Consumers get hit doubly hard because they pay more at the pump, and they have to pay more for goods,” he said.



Munroe Dairy of East Providence delivers milk via 30 trucks to homes within a 40-mile range of the plant. The company had to add a fuel surcharge when gas prices spiked three years ago, and if prices continue to increase, they may have to jack up the price again.



“The gas prices work for us and against us, because we have to do the delivery, but we also get more people calling us for delivery because they don’t want to drive to get it themselves,” said Munroe President Robert Armstrong. “We had to start charging a 75-cent fuel/service charge about three years ago when the price of gas spiked. I don’t know if we’ll have to do something again if the prices keep going up.”



Rhode Island Public Transit Authority Communications Director Karen Mensel said though the organization doesn’t pay the same prices as consumers – the agency paid between $1.24 and $1.52 for fuel this January – when the price of fuel goes beyond budget allowances, cutbacks in other areas are inevitable.



“If necessary, we borrow the money or we’ll cut back in other areas, like our advertising budget, to make up for the increase,” Mensel said.



The increase cost of fuel hasn’t traditionally pushed people to use public transportation, Mensel said, so RIPTA’s fuel prices aren’t supplemented by more passengers.



In January, RIPTA was 12.8 percent below what the agency budgeted for the form of diesel fuel it uses, but increasing prices could put them in the red.



Despite grim prices, there are ways companies and individuals can save money on gasoline, AAA’s Paul said.



Avoid constant breaking and acceleration, which uses extra fuel. Make sure a vehicle is well-maintained and keep enough air in the tires, because tires low on air require up to 3 percent more fuel, he said. Also, even 25 pounds of extra weight on a vehicle, like a bike rack, requires more fuel to be used, he said.



People should also combine trips whenever possible to conserve fuel, Paul said.



“Going to make a delivery and then driving all the way back to get the next isn’t very economical. It can’t be avoided in some cases, but combine trips whenever possible,” Paul said.



He said unless a car requires premium grade gasoline, use regular.



“People think that the better grade will make their car run better or they get better mileage, but you don’t,” Paul said.



The cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners (40 percent), refinery processing costs (13 percent), marketing and distribution costs (13 percent), and retail station costs and taxes (31 percent), according to the U.S. Department of Energy.

No posts to display