Gas prices strap local businesses--Delivery services raise prices, turn to propane in response

URL Thursday, March 27, 2003 By JO DEE BLACK Tribune Staff Writer

The scale finally tipped in the balancing act played at Joe's Delivery Service. The in-town courier, which delivers everything from prescriptions to paperwork, recently increased rates for the first time in four years.

Owner Joe Murray says escalating fuel prices are to blame.

"I've got to stay competitive to make a living," he said. "I have to make my payments, too. It's tough."

In Great Falls, businesses that offer delivery services are dealing with higher fuel costs in a variety of ways.

Murray said he used to spend about $800 a month for fuel for his business' three delivery trucks. Today, the bill for gasoline is about $1,000 a month and he expects it to go up to $1,200 a month soon.

A propane-operated van Joe's Delivery Service added to its fleet a few years ago is getting more use these days. The propane-powered vehicle gets about eight miles per gallon, compared with the 11 or 12 miles per gallon the gasoline-operated vans get.

"But with the price of gas now, it really doesn't matter," Murray said.

Regular unleaded gasoline is running about $1.63 a gallon in Great Falls; diesel prices are about $1.85 a gallon. A gallon of propane vehicle fuel costs about $1.26 in Great Falls.

According to the AAA Fuel Gauge Report, the average price of unleaded regular gasoline in Great Falls was $1.25 a gallon one year ago, diesel was $1.27.

Shumaker Trucking tacked a fuel surcharge on its bills to trucking customers to deal with higher prices.

"We've had to do it two or three times in our history," said owner Gene Shumaker. "Our customers realize what's going on. They all have to put fuel in their own vehicles."

Deliveries at Kranz Flowers and Gifts are carefully planned to maximize fuel economy, said owner Doug Forbes.

"We are trying not to raise our delivery costs and we are watching our routing to make sure deliveries are made in areas of town once or twice, not three and four times," Forbes said.

He recently hired a second driver to eliminate delivery backtracking.

"We've been through this before," Forbes said. A couple of years ago he traded in the shop's eight-cylinder vans for more fuel efficient models and cut the monthly gas bill in half from about $1,000 to $500.

Shumaker is optimistic prices will come back down, but Murray isn't betting on it.

"From what I understand, there's no end in sight," he said.

Crude oil prices tumbled March 17 after President Bush announced the United States would go to war with Iraq unless Saddam Hussein left within 48 hours.

On March 12, the spot price of a barrel of crude oil on the West Texas Intermediate market was $37.87. The price dropped below $30 per barrel on March 19 for the first time since Dec. 13, according to the U.S. Department of Energy's Energy Information Administration.

The speech removed uncertainty over whether the war would happen, a factor pushing prices higher, according to the Energy Information Administration.

On Monday, prices at the pump for regular unleaded gasoline fell, after going up 13 of the past 14 weeks. Nationwide, the average price was $1.69 per gallon, still 34.81 cents higher than one year ago, according to the Energy Information Administration.

Spot prices for crude oil are rising again because of uncertainty about the length of the war. Oil exports from Iraq have halted.

In addition, unrest in Nigeria forced companies there to reduce exports by 800,000 barrels a day.

On the West Texas Intermediate market, the spot price for a barrel of crude oil was $27.18 Friday. On Tuesday, the price was $33.42.

Shakiness about the war comes at time when the U.S. oil market is rebalancing from shortages caused by a nationwide strike in Venezuela.

Exports from that country nearly stopped in December when opponents of Venezuela's President Hugo Chavez organized the strike. Of the 9 million barrels of crude oil imported daily by the United States, about 1.3 million are from Venezuela.

Oil production in that country has resumed. Striking workers say about 2.4 million barrels of oil are being produced a day, but the government claims that it's putting out more than the 3 million per day prestrike level.