Rising fuel prices crimping business and commuter outlooks
Jerry Weakland dropped his last freight load in Florida on Friday, March 9, after 18 years working as an owner-operator through a business relationship forged with St. Helens-based Ken Best Trucking LLC.
When he made it back to his home in Alabama, Weakland started the process of cleaning his 1998 Kenworth W900 truck and prepping it for sale.
'I have to get a regular job now, and that's what I'm in the process of doing,' said Weakland, 50.
A changing trucking industry that favors corporate freight haulers contributed to Weakland's decision to shutter his business, he said. But it was the recent surge in diesel prices that punched the final nail in the coffin.
'When it costs you $1,600 to fill up a tank, that's a major setback,' said the former Oregon resident. 'It is more than half of your operation.' He said fuel accounts for 95 cents of the $1.65 he earns per mile for moving general freight.
Oregon, and the West Coast in general, has some of the highest average fuel prices in the country. As of March 13, Oregon's average cost for a gallon of regular gasoline was $3.97, the eighth highest state average in the country. The national average for regular gas was $3.80. One year ago, the national average was $3.55.
For diesel, the average price per gallon is running $4.36, according to a March 13 AAA report.
Geopolitical factors, reduced refining capacity and the tight balance between global supply and demand for fuel is affecting crude oil prices, according to the U.S. Energy Information Administration, an independent fuel analysis agency.
In a relatively fuel-efficient 2001 Honda Civic, a trip from Portland to Seattle and back would cost around $44 in gas, based on fuel price data from the Oil Price Information Service.
A recent AAA Oregon/Idaho report shows that fuel costs have incrementally risen by about 53 cents a gallon since late December. Before that, prices had been mostly trending downward since September.
Affecting business, commuters
Joe Davis, co-owner and manager for St. Helens business Richardson's Furniture, said fuel prices are starting to hit home.
'It's going to affect, obviously, the cost on all the goods, which is going to affect everything from the grocery stores to furniture to everything,' Davis said.
Beyond a floating fuel surcharge on store deliveries that rises and falls with prices at the pump, Richardson's industry - furniture sales - and its reliance on petroleum-based foam products has a more intimate tie to prices for crude oil and refining.
'It's not just getting stuff from Point A to Point B,' he said. That is a part of the operation that is unavoidable, however. Richardson's currently has a $25 charge for delivery anywhere in the county, a rate Davis said could be revisited if analysts' predictions of steadily rising diesel prices through the summer are realized.
Commuters are revisiting their approach to fuel costs as well. Janet Wright, director for Columbia County's bus system, CC Rider, said local interest in public transit is on the rise.
'We've been getting a lot more requests for information,' Wright said.
The bus service, despite being exempt from the federal diesel tax, is not immune to price hikes. The most recent monthly fuel bill was $21,000, Wright said, versus the $17,500 it had been running.
Wright said the rising prices are forcing harder looks at efficiency. She also said if prices continue into the realm of $5 per gallon, as some analysts have predicted, it could force a review of fare prices.
'If I have to raise rates, there's going to be a good reason for it,' she said.
Davis echoed that sentiment. 'We definitely try to absorb as much as we can and pass on the savings to our customers. But if it gets out of hand, we're going to have to make some adjustments on how we run our business,' he said.
So far, fuel prices haven't bitten too deep. Richardson's is part of Pacific Furniture Dealers, a 70-store buying group that pools together for stronger purchasing power, including on deliveries. He said the word from drivers is that furniture deliveries, and sales, are as strong as they have been in a long time.
'Sales have been good, knock on wood,' he said. 'We're definitely, I feel, we're kind of on the downside of the recession. I definitely think we're getting out of it. Hopefully it stays like that.'
What makes up the cost of U.S. gas?
76 percent - crude oil prices
12 percent - taxes
6 percent - refining costs
6 percent - distribution and marketing fees
Stover E. Harger III contributed to this story.