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Wednesday, June 11, 2008 01:39 am

Gas pains

Coping with high fuel costs is more difficult for businesses

Untitled Document Like everyone else, the high price of gas has forced Robert Smith to do more with less. Whereas most people have adjusted by parking the RV and canceling the family road trip or cutting back on dining out, Smith, manager of Springfield taxi service A Diamond Transportation, says he’s lost one-third of his workforce in recent weeks. “It’s cost me a couple of drivers. They quit because they can’t afford to drive,” Smith says, referring to gas prices, which recently hit the $4 mark in the capital city. His company now has just four cabs on the street — two during the day and two at night — which, he says, is the minimum they need to operate. Springfield taxi services are unable to increase their rates by even a penny without obtaining the approval of the City Council. Cab companies may charge a $1 fuel surcharge, thanks to an ordinance passed in September 2005 when gas was $2.25, but Smith thinks it may be time to ask the City Council for more relief. Although many people think that businesses simply pass their increased costs, such as the skyrocketing cost of fuel, on to consumers, that isn’t necessarily the case. In fact, adjusting to market changes is harder for business operators, who are bound by layers of government regulations, than it is for individuals.
Don Schaefer, executive vice president of the Springfield-based Mid-West Truckers Association, says that even though the price of diesel fuel has doubled in three years — to $4.70 per gallon, on average — many trucking companies are absorbing some of the added costs. Often the freight haulers take a loss just to maintain cash flow, he adds. “Big companies, your UPSs, can dictate their prices. Once you get past those, they’re out there bidding for projects and jobs, and because of that the competition is very cutthroat. In the long run it’s going to do them in,” Schaefer says. The Springfield Mass Transit District may not have as much competition for customers as trucking or cab companies do, but the district hasn’t been immune to the spike in the prices of the diesel fuel and natural gas that power its fleet. Subsidized by state and federal governments, the SMTD cannot drastically increase its fares. “Our fares don’t cover our costs. We only charge $1 per trip, and our cost per trip is greater than that,” says Linda Tisdale, executive director of the SMTD. If fuel costs continue to rise and the Legislature — which provides 50 percent of the SMTD’s operating budget — fails to allocate additional funding, Tisdale says, the district will look at all options, including cutting routes or their frequency, parking some of the fleet’s vehicles, and increasing fares. Nor does Tisdale expect that the SMTD will receive funding to maintain its pilot program for evening bus service, which expires in October, if not sooner. Meanwhile, at Abraham Lincoln Capital Airport, traffic has held steady. Aviation-services manager Bill Dorsch says that the price of airline fuel doesn’t fluctuate as much as that of motor fuel, plus the airport’s largest commercial carriers — United Airlines and American Airlines — purchase fuel at cheap bulk rates. The airport’s corporate clients don’t feel the pinch as much when fuel costs rise, Dorsch says. The airport is reducing fuel consumption in other ways, says Springfield Airport Authority executive director Mark Hanna. “We are looking to scale back where we can and where it makes sense — in terms of mowing and trimming, anywhere it doesn’t compromise safety and security,” he says.
Contact R.L. Nave at rnave@illinoistimes.com
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