Local service businesses whose fortunes are tied to the cost of gasoline and diesel fuel aren’t hitting the panic button yet. But most admit they’ve got a lot more to worry about these days.
Domino’s deliverer Kyson Lamoreau embarks on a delivery. At the Domino’s franchise on Adams Avenue, drivers buy their own fuel and get paid by the mile. Owner Jessy Watson said his store recently increased the rate it pays its drivers from 25 cents a mile to 28 cents a mile. - The Observer/CHRIS BAXTER
The trick is to keep operating costs down and at the same time maintain affordable prices for customers. With diesel already topping $4 a gallon, and gasoline headed that way, it’s not easy.
Mountain West Moving and Storage in La Grande is one of many struggling with the problem. The company runs five trucks throughout the Pacific Northwest and three others in the western United States. Owner Craig Braseth reckons those vehicles together rack up about 25,000 miles each quarter.
Industry rules allow the company to levy a fuel surcharge — 4 percent within the state of Oregon and 13 percent on interstate runs. If it
wasn’t for that, Mountain West might not be able to keep up with fuel costs that rise almost daily.
“I really feel sorry for the independents who can’t charge the surcharge. If we didn’t have it, it would be devastating,” Braseth said.
In recent times, the cost of fuel has forced changes in the way Mountain West conducts business. Fuel conservation is the name of the game now. The company makes a conscious effort to cut down on waste.
“If we have three or four estimates to do out of town, we bundle them so we’re only making the one trip,” Braseth said.
He added that drivers are always on the scout for the best fuel prices.
“They’re on the CB with other trucks to find out where the least expensive fuel is,” he said. “I say least expensive, not cheap. There’s no such thing as cheap fuel anymore.”
Braseth said his company bought new diesel trucks a couple of years ago, believing fuel bills would be lower. But since the new trucks went on line diesel prices have gone up by leaps and bounds.
Braseth said he doesn’t completely regret changing over to diesel, though savings aren’t near what he hoped for.
“The diesel engines do get better mileage. One kind of cancels out the other,” he said.
The company runs 10 charter buses and 10 school route buses, all of them powered by diesel engines. Currently, Moffit Brothers is paying $4.16 a gallon for fuel.
“It’s gotten so it costs $800 to fill a bus,” said Roberta Moffit of the company. She said buses get between 500-600 miles to a fill-up.
Moffit Brothers, like Mountain West, adds a fuel surcharge to its bills. Roberta Moffit, like Braseth, doesn’t think her firm could survive without that.
And Moffit Brothers drivers, like those of Mountain West, are instructed to do all they can to keep costs down.
“We don’t go anywhere we don’t have to, and we go slower. We don’t do any jack-rabbit starts,” Moffit said.
Moffit Brothers also runs a Wallowa County-based construction company. It too is feeling the pinch, Moffit said.
“We’ve got cats, dump trucks, graders and backhoes and all of them run on good old diesel,” she said.
Moffit said she can’t be sure what the future holds. All she can do is hope for the best.
“I didn’t think I’d ever see the day when it would hit four dollars a gallon,” she said. “Hopefully, it’s going to go down, but that probably isn’t going to happen.”
As the price of gas goes up, so does the price of a ride. ARC owner Carlton Brownson wonders how much the market will bear.
ARC, based in La Grande, runs two cars, one of them available both day and night. The company charges a standard rate, another rate for the elderly and the disabled, and still another for students.
The drivers buy their own gasoline, and they get it at a wholesale price. That helps, but it’s not enough to keep fares from going up. Last June, ARC raised its prices by a dollar across the board.
“We raised our prices to keep up with the extra cost. If gas keeps going up, we may have to do it again,” Brownson said.
Brownson said business has stayed fairly constant over the six years he has owned the company, at 16,000-17,000 fares a year. But he fears that could change. In a worst-case scenario, ever-rising fuel prices could make taxicabs obsolete.
“I’m concerned gas is going to go up 50 cents to a dollar a year, and I’m afraid people are going to stop taking cabs,” Brownson said.
But Jessy Watson, owner of the Domino’s franchise on Adams Avenue, said the problem goes beyond the need to pay delivery drivers more per mile.
For the average family, it’s cheaper to cook and eat food at home than it is to buy a pizza out. Watson believes high fuel prices are causing many people to pass on pizza in favor of home prepared-meals.
“If it’s a choice between pizza and filling their vehicle, they’re going to fill their vehicle,” he said.
With the steep rise in fuel prices, all business costs are going up, and that includes the cost of delivery.
Drivers buy their own fuel and get paid by the mile. Watson said his store recently increased the rate it pays its drivers from 25 cents a mile to 28 cents a mile. He said that without decent reimbursement, he wouldn’t be able to recruit and retain good employees.
At the same time, increasing the price of a pizza in an already overstressed market is risky.
“I’ll tell you we’re not selling as much pizza as we once did,” Watson said. “What we’re trying to figure out is how to sell pizza for less. It’s not just a problem for this franchise, it’s a problem everywhere.”
Of all the local business owners contacted for this story, Dale Mammen, owner of the Rendevous RV park in La Grande, had the most optimistic outlook.
Mammen said he saw a 13 percent increase in his business in the period between April and January 2007. Things aren’t quite so stellar this year, but they’re still encouraging. From January to April 22, business is up 6 percent.
Mammen said “snowbirds” who travel south for the winter and north in the spring report paying about $55 more for fuel than they did previously. So for many people, highway travel remains affordable.
“The retired public adjusts,” Mammen said. “For many retired people, fifty bucks or so is nothing.”
Increasingly, according to Mammen, RV travelers are towing a small economy car behind. When they pull in at an RV park, they tend to stay longer, using the smaller vehicle for side trips.
“I’d say at this point, fuel cost has had little impact, other than the fact people are staying longer at a spot,” Mammen said.