Surcharges to Cover Fuel Hikes Will Be Passed to Consumers
Local truckers are feeling the heat from high fuel prices , and some of them worry they may be put out of business.
Along with gasoline prices, prices for diesel fuel have climbed in the past year. The national average for a gallon of diesel fuel is now $1.451, up from about $1 one year ago, according to information from the U.S. Department of Energy.
Prices in the Golden State are much higher. Throughout the West Coast, the average cost for diesel is $1.597, while in California the price is $1.632.
Similarly, the price for gasoline is now $1.508, up from about $1.25 a year ago. On the West Coast, the price is $1.734, while in California, the price is $1.793.
Dan Norwood, owner of North County-based A Spectre Air & Ground Freight Inc., noted that carriers charge him a 3 to 6 percent fuel surcharge , a cost which, as a transportation broker, he must then pass on to his customers.
Customers spend anywhere between $50 and $15,000 to ship through him. For a person spending $1,000, that translates into an extra $60 for fuel costs, Norwood said.
Still, Norwood noted that his business hasn’t been affected.
Paul Goldstein, of Santee-based Goldstein Equipment, has had more problems with high diesel costs.
“They’re going to force me into being broke pretty soon if they keep going up the way they are,” he said.
Prices jumping 25 cents per gallon in the last two months put a squeeze on Goldstein’s company, which relies on diesel to transport heavy equipment.
Goldstein estimated that this lowered his profits by about 15 percent. His profits could go even lower if fuel continues to go up, he said.
Goldstein expressed outrage at a factor beyond his control, which he said belies the oil industry argument that overseas fuel scarcity is the cause of high prices here. Goldstein noted that fuel prices are noticeably lower in Los Angeles than here, and still lower in other parts of the country.
A friend of his made a trip cross country just three weeks ago, and he noticed a huge disparity in oil prices.
“He saw diesel prices that went from 91 cents a gallon to $2.03 a gallon,” he said. “The highest price I’ve ever seen was on the news last week. I think it was Syracuse, N.Y. , $2.23 a gallon for diesel. I just about choked when I saw that.”
So far, Goldstein hasn’t passed the added costs on to his customers, but may have to do that if the trend in fuel prices continues.
“If the fuel prices don’t recede to where they were, we’re just going to put a 5 percent fuel surcharge on everything that we do, until the fuel prices do go back down,” he said.
Another option is to simply increase prices until their expenses come back down , and if the prices don’t come down, the new prices will stay in effect, Goldstein said.
“I think that’s pretty much where everyone is at,” he said.
Viking Freight, which has an office in the Miramar area, instituted a fuel surcharge back in August. The surcharge came in response to fuel prices that had been rising steadily for several months before that, said Kathy Keller, manager of corporate communications at the national headquarters.
“We held out as long as we felt we could,” she said.
The surcharge is on a graduated scale, going up or down with fluctuations in fuel prices. When first implemented, the surcharge was 0.5 percent; now the surcharge is 2.5 percent, Keller said.
Keller keeps a constant watch on the fuel figures. She doesn’t like the fuel surcharge, saying it hurts her customers, and ultimately, the economy.
“It affects the end consumer,” she said. “If manufacturers have to pay the fuel surcharge to us for the transportation of the product from the plant to the retail store, at some point they have to pass that along in the price of the product,” she said.
Keller hopes fuel prices may come down soon. She noted that the national average of $1.45 was a decrease over last week’s average of $1.47.
“It’s nice to see a little bit of a turnaround. I don’t know if 2 cents is indicative of a trend,” she said.