Fuel prices hit hard

Higher costs cutting into local businesses' profits

Posted: Thursday, September 14, 2000

ABG Bus Line Inc. owner Eric Lindegaard said it's difficult forecasting fuel prices when he bids on his job as the Juneau School District bus contractor.

"If I could project that, I wouldn't be in this business, I'd be in the stock market," he said, chuckling.

It's also difficult on his business when he underestimates. That's what he and many other Juneau businesses are dealing with now.

As unleaded gasoline heads toward $2 a gallon and the cost of diesel and aviation fuel follows bus lines, fishing charters, tour boats and taxi companies are watching the impacts on their bottom line.

ABG must keep a fleet of 42 buses filled with fuel every day. Most run on diesel, which has jumped 30 to 40 cents per gallon in the past month.

"Most of them pass the gas pump every third day, so it's a pretty significant cost," said Lindegaard.

Jeff Hansen, manager for the wholesale fuel distributor Taku Oil Sales, said good news isn't on the horizon.

"It's just really hard to tell," Hansen said. "From what I read over the summer we should have had relief by now and it's gone up faster than ever before. In the near future at least, prices are going to be a little higher."

Juneau Taxi and Tours owner Lynne Harris said the higher prices affect her drivers, who pay the fuel bill.

"It does take more money out of the driver's pocket," she said. "Any extra money going out is a big deal to them."

In addition to the fuel, drivers must pay dispatch fees and a fee to lease the vehicle.

"By the end of the day, that's quite a bit of money before they start to make any themselves," she said.

Harris said she might consider increasing her fares to make up for the higher fuel costs, but her rates like every other taxi service are regulated by the city.

Douglas Trucking general manager Keith Hermann said the higher fuel costs make only a nominal difference for his company.

"Since there's no highways out of Juneau, most of the cost of providing service is the time that it takes, not the gas consumed or mileage," Hermann said. "With us, fuel averages about 3 percent of the total bill, so even if the cost (of gasoline) goes up 50 percent, your bill goes up, what?, 1.5 percent? It's not significant. At this point we just eat it."

Big Jim's Charters, meanwhile, is being eaten up.

Jim Preston, owner of Big Jim's and the president of Juneau Charterboat Operators Association, said rising fuel costs, diesel in particular, are killing the tour boat and sportfishing industries.

"It (diesel) just jumped 20 cents at the dock this weekend, from $1.41 to $1.61," he said. "That's 60 percent higher than it was last year at this time. People are already talking about all the other things going on with chartering it's not worth doing."

He said his 34-foot boat has a 300-gallon tank, which he generally fills twice per week. He said he averages about 10 gallons per hour.

"It certainly affects our industry a lot, but what are we going to do?" he said.

NorthStar Trekking helicopters, like most other aviation businesses in Juneau, uses jet fuel. While the jet fuel market isn't quite as volatile as automotive fuels, it has increased in price.

"I haven't seen the latest (prices), but I just heard that we're going to get the biggest single jump that we've ever seen," said NorthStar owner Bob Engelbrecht.

He said he must fix a price on his tour packages early in the season, and can't re-adjust them later.

"Our prices are set almost a year in advance. Oil prices were looking pretty darn low back then. It's a problem now because you can't adjust them at this point."



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