Spiking gas prices make adaptation a necessity

by Paul Schreiber

SBJ Reporter

pschreiber@sbj.net

Gas prices are rising and area businesses heavy on fuel consumption are reacting with concern to current market conditions.

"I'm just thankful we're down to about 12 more days of school," said Glenn Bradley, coordinator for transportation for Springfield's R-XII School District.

Using about 1,800 gallons of unleaded fuel a month, Bradley has seen the city's discounted price rise 15 cents a gallon from $1.18 in September to $1.33 today. Likewise, diesel fuel costs have climbed. In September, it was $1.04 a gallon; now it's $1.25, he said. The district uses 22,000 gallons of diesel per month.

The additional costs due to fuel increases have hit the school district for about $46,000 over what it would have spent had prices remained the same, Bradley said. The school district operates 129 of its 135 buses each weekday, and those buses log a total of about 2 million miles a year in school routes, side trips and athletic events, he added.

The nationwide average price for a gallon of unleaded gas is expected to peak at $2.03 in June, with an April-September average of $1.94, according to the April 11 "Short-Term Energy Outlook" from the U.S. Department of Energy.

Fleet transportation enterprises have likewise felt the fuel scourge. "Our operations are less profitable, obviously, than they used to be, as a result of this," said Howard Fisk, owner of 28-year-old J. Howard Fisk Limousines, which runs about 100 vehicles. "Anytime you feel like there's pressure in your overhead, then you feel compelled to be a little more conservative."

Though Fisk's hourly rates have not increased as a result of higher gas prices, that may change. "Yeah, there will be a point that we feel we've got to do something," he said. Any pricing change would likely be in conjunction with other increases the business faces, such as rising insurance rates, he added.

Fuel-efficient vehicles

However, for some companies, higher gas prices can be a boon to business. Local car dealers report higher sales of fuel-efficient vehicles.

A noticeable rise in customer inquiries related to more fuel-efficient autos began in March, said Mike Lee, sales manager at Reliable Toyota. And "sales have jumped tremendously," on the Prius, a $22,500, 50-mile-per-gallon hybrid vehicle that operates on both gasoline and battery power, Lee said.

The problem, he added, is that customers have to wait a year and half to get a Prius after it's ordered. Local sales of the Prius typically run about four to five a month, but Lee estimates that could more than double if the dealership had the inventory. Lee has also noticed customers trading in gas-guzzling SUVs for smaller, more fuel-efficient rides.

In an effort to attract those who want fuel-efficiency and large size, Toyota is launching its Highlander Hybrid next February, Lee said. Running between $30,000 and $40,000 and delivering about 40 miles per gallon, Reliable's initial stock of one a month beginning next February has already sold, as have March, April and May's allotment, Lee said.

Airfares

Local airfares seem to be holding steady against rising fuel costs, said Sherry Wallace, marketing spokesperson at Springfield-Branson Regional Airport. If that weren't the case, "we would be noticing big jumps. We haven't felt that yet," she said, however, "I can't tell you it's not coming."

Ways that carriers might offset fuel price increases would be to ask the airport for an adjustment in landing fees, Wallace said, but "no one has asked us for that." Another tactic is for airlines to attach a fuel surcharge to their tickets, she added.

Wallace didn't know what the commercial cost-per-gallon was that Air BP charges the airport's carriers. She said, however, that both grades used for private planes have increased in the last year. In May 2003, the 100 low-lead fuel used for piston engine planes was $2.63; now it's $3.02, she said. Jet fuel for turbine engine planes has increased during the same period from $2.51 to $2.77, she added.

Gas has long been near the top of air carriers' expense sheets. Due to fuel price increases over the last 12 months, "fuel today is now our second largest single cost in terms of all of the operating dollars we have in the big pie," said Nick Miller, manager of corporate communications with Comair, Delta's carrier in Springfield. It's always been in the top five, he said, adding that personnel costs are No. 1.

Conservation efforts

Airlines are doing what they can to slow the fuel burn. Comair has gone to single-engine taxiing when moving across the runway, Miller said.

In school bus operations, greater vigilance regarding bus idling times should help curtail expenses, Bradley said. Still, that can't always be helped. When extremely cold weather strikes, diesel buses have to be fired up well in advance to ensure they're ready when the routes begin, he added.

"When it hits 18 degrees, we're down here starting buses," Bradley said. "Some of these buses will sit down here, and they may idle two to three hours before we have drivers show up." If the temperature drop is too severe, buses may idle around the clock. "We knew if we shut them down, we would not get them started."

Gas-saving measures are essential when nearly a third of the school district's transportation department's budget is spent on fuel. Of the $683,518 total spent during the 2003-2004 school year, gas costs as of May 11 accounted for $214,750, Bradley said.

Bradley's department did save money in the 2002-2003 school year when bus routes were reduced for elementary and middle school students. This resulted in benching about 22 buses and 22 drivers, he said. "We cut $500,000 out of our budget last year."

Tourism dollars

In the long run, the Queen City might actually gain from higher gas prices, at least in terms of incoming visitors and dollars spent. Since Springfield is a drive market with major population centers nearby, "We often benefit from increased gas prices. Peoples sometimes tend to take shorter trips," said Tracy Kimberlin, executive director of the Springfield Convention and Visitors Bureau.

Room occupancy levels are one way to gauge Springfield's visitorship, and through March 2004, room demand is up 13.2 percent over the same period in 2003, Kimberlin said, attributing this to an improving economy and a pent-up demand for travel.

"If gas prices don't go too much higher than they are now, and if the economy continues in a recovery mode, and if we don't have another September 11, it should be a good year," Kimberlin said.