Seeing the price of gas near - or above - $4 a gallon doesn’t faze Jim Klopfenstein much anymore.
The president of Day Heating Co. in Salem, Ore., has resigned himself that what he spends to fill the tanks of his service vehicles isn’t going to go down a lot in the future, if ever.
“It’s one of those things where we’re desensitized,” he said. “This is just a cost of doing business.”
Welcome to 2011, where gasoline prices less than $3 a gallon - a potentially profits-killing amount that would have sent businesses with vehicle fleets into a tizzy just five years ago - seem like the sale of the century.
The sudden run-up in gasoline costs this spring saw per-gallon prices peak at more than $4 in much of the country, an amount that caused many consumers to rethink vacation plans and consider purchasing smaller, more fuel-efficient vehicles.
But for HVAC and sheet metal contractors, options are more limited. Ductwork still needs to be hauled to jobsites and homeowners still need air conditioners serviced, often from a well-stocked, fuel-hungry truck.
Making changesWhen gas first spiked about five years ago, Klopfenstein experimented with passing along the fuel surcharges some vendors were charging his company. But customers complained, so he dropped them and raised his base rates to compensate. He also changed from a traditional time-and-materials billing method to flat-rate pricing, which he said made it easier to account for gas price fluctuations.
Klopfenstein, who serves as chairman of a Sheet Metal and Air-Conditioning Contractors’ National Association committee focused on residential work, said neither he nor most other members of the committee consider fuel costs to be a big deal this year.
Day Heating’s fuel bill can be up to $6,000 a month.
“Other things affect us a lot more,” he said. “I think people have figured out that they have to quit whining and figure out a way to deal with something that is not going to get better.”
But if Klopfenstein is more accepting of the new normal in gasoline prices, 200 miles away in Everett, Wash., the monthly gas bill at Evergreen State Heat & AC still gets owner Russ Kimball upset.
“It’s painful,” he said. “It’s difficult. It’s made it that in order to stay in business… we need to get rid of an extra pound of flesh.”
Like the governments of Greece and the United Kingdom, Kimball said he has instituted “austerity” measures to deal with the rough economy. He cut most of his company’s overhead 25 percent, but area gas prices - about $3.90 a gallon as of mid-June - have sent his vehicle costs in the other direction.
“(And) I don’t have terribly old vehicles,” he said. “Most of my expense is gasoline.”
New vehiclesKimball replaced most of his fleet of diesel trucks and gasoline-powered vans about five years ago. The diesel vehicles average around 24 miles per gallon. The vans get between 11 and 15 mpg, he said.
Fuel use is something Kimball said he watches closely.
“I’m a numbers guy,” he said. “These things do affect me.”
They also affect Leroy Seurer, CEO of Centraire Heating and Air Conditioning Inc. But for him, putting a gasoline-related line item into a customer’s bill is out of the question.
“I truly do not believe in adding fuel surcharges to my billing,” he said.
The Eden Prairie, Minn.-based company specializes in commercial HVAC service and installation in the metropolitan Twin Cities area. The company has 26 service vehicles, including vans and pickup trucks, which are used by estimators and installers.
Seurer said that it never sits well with him when he receives a bill and it comes with fuel charges. He said he doesn’t want to pass the same aggravation on to his own customers.
Like Evergreen, Centraire uses flat-rate pricing on its jobs. Each year, Seurer said the company takes a look at its expenditures and adjusts prices to better reflect rising overhead.
When it’s time to look at pricing again, Seurer said that the new cost of fuel will definitely be built in to his rates.
Pain at the pumpAs of mid-June, Seurer said that he was filling up his vehicles for approximately $3.69 a gallon. But a couple months earlier, gas in the Minneapolis area was just a few cents under $4. It’s not the first time the company has seen big spikes in fuel prices, and that has changed the way the company does business.
Seurer said he has altered the way Centraire hires technicians, even if it has been on a “subconscious” level.
In the past, the company had no problem hiring technicians that lived 70 to 80 miles outside the metro area. But since every technician is allowed to take their service vehicle home with them, Centraire is less willing to hire one who will burn large amounts of fuel just driving back and forth to work.
Centraire also has technicians on call in case customers have a crisis. If a person lives too far outside the company’s service area, “You just can’t afford to have them do emergency service calls,” Seurer said.
Relief to come?Oil industry experts are split on whether gas prices will continue to trend higher or moderate in the coming months and years. Chris Faulkner, chief executive officer of Texas-based Breitling Oil and Gas is among those who say petrol prices will likely continue to climb.
“I would not be surprised if we see $5 per gallon gas by the end of the year,” Faulkner said in late April. “And that is something the American people may need to be prepared to deal with.”
The Energy Information Administration, which tracks fuel prices for the U.S. government, doesn’t see gas getting that high anytime soon - but it doesn’t see it dropping a lot, either. For the rest of the year, the EIA predicts gas will average $3.60 a gallon nationwide. Next year, it will be about $3.67 a gallon. The current average price is about $3.65 a gallon - a level that analysts expect to hold into September.
For reprints of this article, contact Jill DeVries at (248) 244-1726 or e-mail firstname.lastname@example.org.
Government website suggests energy savingsBesides driving a smaller car or truck, there are a lot of ways to save on fuel, some of which you may not know.
At www.fueleconomy.gov, the U.S. Department of Energy gives tips on choosing an energy-efficient vehicle and ways to save at the gas pump. Visitors can compare vehicle miles per gallon using the Environmental Protection Agency’s newly revised and more accurate estimates.
Among the tips listed on the website:
Lighten up. Carrying less weight in a vehicle saves gas. Just an extra 100 pounds of cargo cuts fuel economy by 2 percent. See if technicians really need everything they’re carrying in service vehicles.
Slow down. The most efficient speed to drive is around 60 mph. Every five mph above that is like paying an extra 20 cents per gallon for gas.
Choose the right vehicle. If you don’t need the extra capacity of a truck or SUV to visit a jobsite, driving a sedan could save substantial money. Think about what would make the most sense to drive for each task. Have a variety of vehicles available.
Inspect the air filter. A clogged air filter can cut fuel economy by up to 10 percent. Cars and trucks also run better when air filters are clean. This is a very inexpensive way to improve gas mileage.
Check the tire pressure. Many people drive around on underinflated tires, sacrificing mileage. Properly inflated tires not only boost mpg, they make vehicles safer to drive. However, don’t inflate tires to the “maximum” pressure printed on the tire’s wall. That’s usually too high for most driving conditions. Use the pressure recommendation in the car or truck’s manual or what’s printed on the driver’s side door.
Use the right oil. Using the wrong grade of oil not only wastes money when you buy it, it can cut fuel economy by 1 percent to 2 percent, which adds up over time.
Avoid idling. When a car or truck isn’t moving, it gets zero mpg. And typically the larger the vehicle, the more gas it wastes standing still. Shut off the engine when possible.