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Fueling concern: Carrying an extra cost

High gas prices translate into more expensive goods

Posted: Monday, September 19, 2005

 

  Bryan Rhodes and Royce Christensen of Carlile Transportation Systems unload goods at a Tesoro 2Go store in Soldotna last week. High fuel prices affect the prices of nearly everything that has to be transported. Photo by M. Scott Moon

Bryan Rhodes and Royce Christensen of Carlile Transportation Systems unload goods at a Tesoro 2Go store in Soldotna last week. High fuel prices affect the prices of nearly everything that has to be transported.

Photo by M. Scott Moon

Editor's note: The following is the second in a series of stories about what effect high fuel prices are having on the Kenai Peninsula. Tuesday's story will focus on bike riding as a way to cut gas costs.

Filling a car's gas tank at the end of a long commute is not the only place Kenai Peninsula residents will feel the sting of rising gasoline and diesel prices.

High diesel prices are hitting the trucking industry hard, according to some, and will raise the cost of doing business for these companies and the price of goods — including a can of soup.

According to the Alaska Trucking Association, 94 percent of Alaska's population is directly dependent on trucking to supply their everyday needs. The high price of gasoline is "drastically" impacting the trucking industry, and in turn the price of goods, said Michael Bell, executive director of ATA.

"(High prices) drive up the cost of everything," Bell said.

He pointed out that 90 percent of the goods in Alaska are shipped in with a container or roll on, roll off trailer through the Port of Anchorage. Then, many of these goods are distributed with trucks throughout the state.

Sea barge companies have a fuel surcharge which is passed on to the consumer, he said. Right now, there is an 11.5 percent sea barge surcharge. He said that is projected to increase substantially.

Jim Lackey, Kenai Peninsula terminal manager for Carlile Transportation Systems, said trucking is a low margin industry — typically with a 1 to 2 percent profit margin. As the price of gasoline and diesel rise, the price of shipping will get more expensive, he said, adding this will raise the cost of goods.

Carlile charges customers a fuel surcharge to fill the 150- to 300-gallon diesel tanks on its semi trucks. Friday, Carlile paid $2.85 per gallon of diesel to fill the trucks, he said. This charge has been steady in the past but has increased this year, he said. It has fluctuated between 10 and 17.5 percent this year, he said.

The company updates these charges on its Web site. Friday, the surcharge was 17.5 percent.

This is meant to cover the cost Carlile is charged from other carries for fuel, he said.

Travis Steinbeck, vice president of retail for Country Foods IGA in Kenai, said the grocery store has already had a lot of price changes coming in.

Bringing a semi truck with wholesale groceries on it costs a thousand dollars more than it did three months ago, he said. This has increased the price of some goods, he said.

For example, he said some canned soup has increased by a couple of pennies. Because many goods come from the Lower 48, fuel prices there will impact the price of goods here, he said. If those prices do not level out, he said price increases will become more severe.

There's another reason Steinbeck wants fuel prices to drop.

"The community's happier when fuel costs are low."

Mike Goode, owner of Amigo Trucking, says for him the high cost of fuel is harder to pass to the customer.

Amigo Trucking does hauling for the construction industry. Goode started off as a one-truck operator 20 years ago and has built a business doing hauling for the construction industry. Now he has five trucks.

He has been busy working on contracts that he bid last year. The problem, he said, is that the jobs he is working on right now were bid when fuel prices were much lower. Now he's stuck.

Because they are last year's contracts, he said he cannot adjust his prices. He described the high diesel prices as an unforeseen rise in costs and said it could take $5,000 to $15,000 out of small trucking companies' bottom lines.

"Most small trucking companies were not prepared for this," he said in between fielding telephone calls at work.

Goode said he has been trying to diversify his business, getting jobs that do not require substantial fuel costs. For example, he said he is doing construction and landscaping on a Coast Guard base.

For many small operators, he said they may just get out of the business.

"It's going to be like Darwin's theory survival of the fittest," he said. "If you don't diversify, you're going to perish."



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