A global effect
Published 12:00 am Wednesday, April 9, 2008
DEMOPOLIS &8212; Rising prices at the pumps mean higher fuel prices for the transportation industry &8212; which could mean higher prices at the supermarket for consumers.
While consumers feel the effects of high gas as they pay for each tank, local industries feel the effects of the gas spike in their potential to make profits. Each week the Energy Information Administration puts out a national average price for both gasoline and diesel. Many companies, including Dana Suttles Trucking based in Demopolis, use this index as a measure to set their fuel surcharge. Diesel, the main fuel source for the transportation industry topped out at $3.95 per gallon, while the local average is approximately $3.91.
Deborah Wright, sales coordinator for Suttles, explained that this index corresponds to a rate charged per each load. This week, the index pushed the surcharge level up to 28.5 percent of each load sent out.
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With 60 percent of their drivers considered owner-operators, or truckers who own their rigs but are under contract to the company, Wright said many of them are finding it difficult to make a wage with the ever increasing fuel burden associated with their routes. Although 100 percent of the gas surcharge is passed onto these drivers to cover fuel, it still eats into potential wage.
But even company drivers, like Scott Roberson who has worked for the company for 22 years, have been seeking out ways to cut costs in fuel. For his personal travel, Roberson said he uses his motorcycle every chance he gets.
Melvin Yelverton, a dispatcher for Suttles, said the price of diesel is not the only ting seeing an increase. Other important services, such as cleaning of their tanks, require fuel and all of those costs are eventually passed on to the consumer in some way.
All trucking companies have to do it,&8221; Yelverton said.
Fuel and the farmer
Russell Gibbs, who manages two locations for the Central Alabama Co-Op, said the farming supplies industry has especially felt the pinch as prices climb higher and higher.
Each load of soil, fertilizer and pesticide delivered to their Demopolis or Faunsdale location has a fuel surcharge associated with it. As fuel prices fluctuate, Gibbs said this surcharge amount fluctuates as well.
Another aspect of the services they provide, custom application of fertilizer and pesticides, has been altered in part due to the cost of gas.
Whereas the co-op once maintained their own equipment for spraying and fertilizing for their customers, the cost of maintenance coupled with fuel caused them to change their services to a contract basis. Over the last year, they have transitioned into having just one spreader for both of their locations that works on a contract basis.
But the co-op&8217;s business operations are not the only things to change in the industry, Gibbs said. In the last 10 years, Gibbs has seen the number of large farms decrease from 10-15 to less than five. In an already shrinking industry, the added strain of fuel costs can be detrimental.
Gibbs said farmers are now consolidating their trips to the co-op in an effort to save on transportation costs, a practice many people seem to be adopting.