Rising fuel prices impact area businesses

3/2/2013

By RUTH CAMPBELL

By RUTH CAMPBELL

rcampbell@gctelegram.com

If you ask Doug Martin, an owner of Hugoton-based Martin Trucking and Southwest Express, about the effect rising gas prices have had on his business, he has one word for you: bad.

"The cost of operations has risen dramatically. We are paying $4 a gallon for diesel fuel at this time," Martin said. "Operating a truck per day, per mile is increasing. We have to recoup the cost, and the only way to do that is a fuel surcharge. In some cases, we can't pass it all on. The company does have to absorb that. It definitely eats into our profit line."

Along with the expense of fuel, health and liability insurance costs have gone up. Martin Trucking and Southwest Express, owned by Martin and brothers Ron, Jim and Will, hauls primarily crude oil, natural gas liquids, anhydrous ammonia for farmers, animal fat used in cattle feed and biofuel.

"The cost of operation is so high today that it has to be passed on, ultimately, to the consumer," and what the consumer pays for groceries, for example, Martin said.

His firm has been in business since 1984. Ten years ago, the per-day cost of truck fuel would run about $175. Today, it's about $350 a day. The company uses a lot of truck owner/operators.

"They are the ones paying for their fuel. It has been difficult finding owner/operators. A lot of the older ones have gone out of business," Martin said. He added that more companies have gone to strictly employing drivers.

Other businesses around Garden City are either absorbing the cost of gas or making adjustments to account for the rising cost. According to AAA, the average cost of gas around the area is $3.65 a gallon for regular unleaded. the high price is $3.85, and the low price is $3.36.

Jerry Appel, owner of JD Auto Repair, which rents out Budget trucks, said fuel prices have hit his business. The trucks are full when customers rent them, but they have to return them with a full tank or pay a $30 refueling fee, plus the cost of gas, Appel said.

Small trucks, which are 16 feet, have 35-gallon diesel tanks, and the larger, 24-foot models carry 50 gallons.

"It costs more for people to move. People really have to think hard twice before they move," he said.

Kenny Spanier, owner of The Superstore furniture store, is not passing the steadily rising cost of gas on to his consumers, although he is getting hit with it in the form of surcharges from manufacturer deliveries.

"We really haven't changed our pricing structure whatsoever," Spanier said. "We're just absorbing the cost and watching it go up and down."

The Superstore offers free delivery up to 15 miles, but goes as far as 100 miles — one way — out of town and charges for that. Spanier said he sends two people and a box truck to do the job. He said the store is doing well enough that he doesn't have to charge extra.

Berta Powell, owner of Berta's Flowers and Festivities, said she has raised her prices the past month or so and charges $6 for delivery. For efficiency, she tries to make one morning and one afternoon delivery run.

"Just so you're not out all over," she said.

Justin Gallegos started AAA Appliance Repair a month ago. He fixes washers, dryers, dishwashers, stoves, microwaves and other major in-home appliances.

"It's definitely a challenge to get by with the way they (gas prices) are now, but I just started this business a month ago, so it's kind of a struggle to get up and running. ... I travel a lot," Gallegos said.

He covers the area from Garden City to Dodge City, Montezuma, Copeland, Sublette, Lakin and Johnson City.

Demand for appliance repairs is not as strong as it was "when people were just spending money," he said.

"It's definitely a challenge, but you have to get a strong client base," Gallegos said.

Pat Brown, who co-owns T.L. Brown Trucking with her husband, said fuel prices have put their 34-year-old company on a rollercoaster. Their trucks haul mainly cattle to meat packing plants and feedyards, sale barns on the side and from pasture to pasture. Like Martin, the Browns face rising insurance costs and surcharge payments from customers that don't keep up with rising expenses.

"It's nothing to put $800 worth of fuel (in) just for a day — a regular day," Brown said.

For Dillons supermarkets, there are several reasons prices increase or decrease, and while one of them is fuel costs, those cannot be singled out. Spokesperson Sheila Lowrie, based in Hutchinson, said weather, drought and individual commodity prices are also reasons customers might be paying more — or less — at the checkout counter.

With Dillons, Lowrie said, one of the benefits is centralized distribution centers. Its grocery distribution is in Goddard; the perishable distribution center is in Hutchinson; and Jackson's Dairy, where the chain obtains its milk, is in Hutchinson, as well. This enables Dillons to move its product relatively quickly to its locations across Kansas.

"It's hard to speculate and determine prices and increases or decreases, specifically how fuel prices may have impacted prices," she said.

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