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What effect are high gas prices having on your business?

District Voices

July 1, 2004

What effect are high gas prices having on your business?

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Almost all taxicab drivers in the Twin Cities are self-employed and pay for their own gas. So it's taking probably $5 to $10 a day out of their income when they work. Some of them are probably thinking about leaving the business because of it. There's been some talk about an emergency fuel surcharge. It hasn't happened yet, but they're talking about it.
Mark Shields, Operations Manager
Rainbow Taxi—Minneapolis, Minn.

They've asked people to drive less and to use less fuel; obviously it's going to impact our business. The problem we have is putting the inventory in the ground, because we've prepaid for the product, and the amount we pay for the fuel is wire transferred out of our account. We have to borrow more money to put in our bank account to wire transfer the high cost of the product out. We have a hard time making any money on this thing. I've sold gas at 19.9 cents and made 3 cents a gallon; at $2.09 in the past few weeks we haven't even been able to make 3 cents. We get a 6-cent increase, we can't run out there and raise 6 cents; we've got to watch our competition.
Will Carne, Owner
Carne's Amoco—Escanaba, Mich.

Gasoline supply is tight and consumption, or demand, is strong. As a result, we are running our refinery at capacity and making as much gasoline as we can to meet the public's needs. Additionally, refineries consume a lot of power to make refined products. With refineries running at full capacity, the cost of power has also increased.
Alan Anderson, President
Northern Great Plains Region
Tesoro Refining and Marketing—Mandan, N.D., Refinery

As with larger airlines, the additional cost factor of fuel has increased certainly our operating costs and our total costs of doing business. We have implemented a fuel surcharge … to help us pass on some of the increased costs of fuel, but it certainly by no means passes all the additional costs on. We tried for as long as possible to absorb the increased costs of fuel, but it came to the point where recently we could no longer absorb it, so we had to pass on some of that cost.
Craig Denney, Executive Vice President
Big Sky Airlines—Billings, Mont.

In the trucking industry, it's hurting us. [Transport] rates don't go up to compensate. The other [trucking firms] won't raise their rates, therefore you can't. You've got [some] that maybe can't afford it, but they can hang in there longer … because they know sooner or later [gas prices] will go back down. [We're] locked in at a rate that we have quoted, and that's the rate we've got to stick with or somebody else will do [the work]. So, it's one of those Catch-22 things.
Dorothy Vanderberg, Manager
Dakotaland Transport—Sioux Falls, S.D.

[O]n the Saturn side it's helping our business tremendously. We're selling more cars, for the economy side. But the person who is bothering to buy a Hummer doesn't care about two bucks a gallon. We have not seen a change in our traffic on Hummer. Our average income has been over $170,000 per household buying the truck. And they think they're getting a deal right now, because 'nobody's buying 'em, so I'm coming in to get one.' So it's kind of cool. But I guess the thing to say is it's not been affecting our business, noticeably.
Mark Beckfield, General Manager
Hummer and Saturn of Eau Claire—Eau Claire, Wis.

Editor's note: Interviews were conducted in early June.


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