Gas Crunch: Are you being squeezed by the high price of fuel?

Posted on August 1, 2004 by LCT Staff - Also by this author

Gas is the lifeline that keeps America moving. It’s also one of the most important components in our economy and in our business livelihood.

With the price of gasoline rising steadily since the start of war in Iraq last year, the cost of doing business in America has skyrocketed.

The transportation industry has been especially hard hit and there’s little relief in sight.

Although gas prices stabilized in early summer and don’t appear to be reaching the $3 per gallon price that analysts predicted, prices are still about 50 cents higher per gallon than they were this time last year, says the American Automobile Association (AAA).

When it comes to using gas, personal vehicles in America guzzle about 115 billion gallons of gasoline and diesel fuel each year, according to the Motor & Equipment Manufacturers Association (MEMA). If you add in mileage of commercial and recreational vehicles, America’s gas usage becomes astronomical.

Fuel prices have always been a sore spot for consumers because they have such a major impact on our lives. During the period of just one month, the cost of a gallon of gasoline can fluctuate by as much as 15 cents or more, such as the prices reflected in April to May 2001, and March to April 2003.

How can limousine operators stay in business, let alone flourish, when fuel is so unpredictable? One way is to learn how to save at the pumps. Ready, Set, Charge It!

Here are some sure-fire ways to save gas money:

* Get a fleet fuel card. Operators can regularly go online and look at each card’s entries. The card system discourages drivers from padding mileage and “pocketing” change when paying for gas with cash. As one operator said, if you’re dealing with cash at the pumps, you’re losing money. The system can save you 15 percent on fuel expenses.
* Inflate tires to proper pressure.
* Eliminate unnecessary weight.
* Avoid long idling. You get 0 miles per gallon when idling.
* Buy gas in the morning. Fill your tank during the coolest time of the day when gasoline is at its densest. Prices are based on volume, not density.
* Maintain preventive maintenance.
* Make drivers energy conscious. Limit air conditioner use; drive at moderate speeds; avoid quick acceleration; use cruise control; and plan trips in advance.
We need to get up to speed on saving money where we can in our gas-driven economy.

When We Asked Operators About Rising Gas Prices, They Shared Some Tips to Beat the High Cost of Fuel

Q: Are your profits taking a hit from high fuel prices?

Yes, the higher gas prices have definitely decreased profit margins for all of our companies.
Roy Jay, president of Limousine and Transportation Association of Oregon and owner of Celebrity Limousine and Transportation, All Star Limousine and Limousine At Your Call, Portland.

Dennis Adams, president of Celebrity Limousine, Malvern, Penn.

We are a small operation (2 sedans, 1 Ford Excursion and 1 stretch limousine). I have issued corporate American Express cards to my chauffeurs who use them to fill up our cars. The cards are only allowed to be used for fuel purchases. Combined between all the chauffeurs and our other monthly expenses, the cards accumulate frequent flier miles.
Mike Geissler, president of Colorado Corporate Coach, Wheat Ridge, Colo.

Yes, of course the higher prices are biting into all operators’ pockets. It’s just how you are able to handle this situation.
Jeff Ellefson, manager of Perfect Touch Limousines, St. Louis.

Q:What have you done about it?

Chauffeurs are trained to make sure that they calculate routes in advance, turn off engines during all extended waiting periods, reduce electrical unit usage to a minimum when limos are not in commercial use. Maintaining regular maintenance intervals, such as tune-ups, tire pressure. Chauffeurs are also trained to drive with windows up to reduce fuel consumption when air conditioning is on. In addition, we have been able to help curb our costs by using commercial fueling depots and negotiating gas prices with distributors.
Roy Jay

10 percent fuel surcharge on trips.
Dennis Adams

We have added a fuel surcharge of 5 percent to every type of run. All of our clients understand the need for this move. We have also cracked down on unnecessary use of vehicles by developing an excel program, which tracks all deadhead miles. By reviewing the numbers at the end of the day, it is apparent if extra unaccounted miles are accumulated. We do not permit taking the vehicles home either, anymore.
Mike Geissler

I had not had a price increase for 2-3 years, so I have now raised the prices $5 an hour across the entire price list. This will add around $4,000 a month extra revenue.
Jeff Ellefson

Q: How much does gas cost in your city? What did it cost last year?

Gas prices in the Portland, Oregon metropolitan area are about $2.55 per gallon for premium, compared to $1.65 to $1.75 the previous year.
Roy Jay

$1.99. [now] $1.59 [last year].
Dennis Adams

The current price for a gallon of regular gas at a convenience gas station averages about $1.95 per gallon, compared to last year’s average price of approximately $1.40 per gallon.
Mike Geissler

$1.73 regular. Not sure [about last year]. — Jeff Ellefson

Q: What’s your yearly fuel cost for a limo sedan? Your other vehicle types?

The annual fuel cost for each limousine varies due to reservation flow. It can range anywhere from $1,050 per year to $3,000 per year, per vehicle.
Roy Jay

I burn 2,000 gallons a month on average for all vehicles.
Jeff Ellefson

Q: Are you charging a fuel surcharge?

If gas prices exceed $3 per gallon, we may implement a fuel surcharge based upon reservation or mileage. In Portland, taxicabs and shuttle vans were recently granted a rate increase by city council to address rising fuel costs. Limousines are exempt from city or state regulations and for the most part that’s due to the behind-the-scenes work of the Limousine and Transportation Association of Oregon, which I am the president.
Roy Jay

10 percent fuel surcharge on trips.
Dennis Adams

We have added a fuel surcharge of 5 percent to every type of run.
Mike Geissler

Jeff Ellefson

Q: Any tips for other operators?

Use a portable GPS system to find the best routes, have regular tune-ups of vehicles and check tire pressures. Project your hourly rates to cover any sudden emergencies such as rising gas or oil prices or increased license fees. Clearly disclose to your customers that there is a small fuel surcharge per reservation. Most customers will not complain, but understand that prices are rising. Airlines are passing along the cost to the end user. Limo, shuttle and taxi drivers need to consider the same approach. Limousine operations should make sure to ALWAYS provide their customer with a written confirmation of the reservation, clearly outlining rates, charges, etc. This avoids confusion and misunderstanding. Only use your limos, sedans or shuttles for business. Limos are not a game.
Roy Jay

You must adjust your rates either with a surcharge or a rate increase to compensate for the additional cost.
Dennis Adams

Some of them have added a fuel charge, some have raised their rates. I do not believe that adding an additional charge such as a fuel charge is the right thing to do, just another charge the customer has to deal with. I say build it into your rates, don’t add another charge.
Jeff Ellefson

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