The Herald, Sharon, PA Published Saturday, Feb. 12, 2000


Fuel prices have firms making tough choices

By Erin Remai
Herald Staff Writer

The steep rise in prices of diesel fuel over the last few weeks have caused major distress to area trucking and busing companies, which may also face surcharges and profit losses to cover costs.

A news release from the United Motor Coach Association said its members are trying to deal with diesel fuel-price hikes without alienating customers.

Greenville-based Anderson Coach and Tour may have to look at rate changes and surcharges for its customers, said Carlotta Sheets, director of marketing.

“We’ve had a rate increase (in diesel fuel) that’s more than 100 percent what we were paying last year,” Ms. Sheets said. “In terms of how it’s affecting our long-term business, we can’t really say what the long-term effects will be.”

According to the news release, charter transportation contracts signed months ago won’t cover price hikes as high as 40 percent and many operators have to decide either to honor original prices and absorb the operating loss or upset their customers by adding a last-minute fuel surcharge to the price of the charter. Over the last year, the price of a barrel of crude oil from the Organization of Petroleum Exporting Countries has gone from $10 to $11 a barrel to nearly $30, the release said. That has gradually hiked the price of gasoline while raising the price of diesel fuel at a faster rate, the release said.

Watson’s Inc. in Jefferson Township, a school bus contractor, is also facing difficulty due to high prices and set contracts, said Brenda Watson, transportation director. “Unfortunately for us we have contracts that are put in place,” she said. “The increase in diesel-fuel prices cuts into profitability for the company.”

Last February, Watson’s paid $1.09 a gallon for diesel fuel and used 3,012 gallons. As of Tuesday, the cost was up to $1.96 a gallon and the company is anticipating paying $3,000 more than it did at this time last year.

“It makes me lose sleep,” Ms. Watson said. “We have contracts with our schools that are in place and the increases can’t be passed on to them. It’s going to affect our bottom line considerably.” Bob Hoffman, terminal manager for Trinity Industries Inc. trucking service in West Middlesex, said the diesel fuel market is so volatile that only one of Trinity’s four vendors would give him a firm quote last weekend.

From the beginning of the month to this week the price of a gallon of fuel went up another 30 cents to $1.85, he said.

“From a year ago, we’re probably 80 cents higher (a gallon),” Hoffman said. “We’re a private carrier, we haul for Trinity Industries, but the cost has to be passed on to someone, so the consumer at the end has to pay the higher price.”

Arrow Trucking Co. in Wheatland is also looking at a drop in profits. As of Feb. 7 the national average price of a gallon of diesel fuel was $1.47. One month ago it was $1.30 and in December it was $1.28, said Jerry Balagna, terminal manager. Balagna said diesel prices are more than $2 a gallon in New England and average about $1.65 a gallon locally.

“We had a tremendous drop in profits. If it continues this way, we will go into the hole,” he said.

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