Petroleum pinch

Impact of high prices stretches far beyond the gas pump

Tempted to just close your eyes rather than witness the financial devastation on the digital readouts at the gas pump?

It's not only gas users who are suffering the price pinch. Petroleum-induced price jumps are evident in the cost of tires, grease and motor oils, groceries, retail goods - anything that has to be transported, or is produced from raw materials that have to be transported.

It hurts everyone.

But consider Steve Hanson's perspective.

With the pump price of diesel on Thursday morning at $4.57 a gallon, Hanson Trucking and Resin Haulers is taking a big hit just by opening its doors every morning in Columbia Falls.

"If I didn't have to pay my fuel bill for two months," Hanson said, "I'd retire right now."

The general manager of his family's trucking business, which also has an office in Missoula, said his fleet of 63 tractors - hauling loads as far away as Wallula, Wash., and staging as far out as Townsend and Radium, B.C. - is running on diesel that costs 35 percent more per gallon than it did a year ago.

Each of those 63 tractors burns 110 gallons a day. Hanson pays a contract price for fuel, which he didn't want to disclose. But figure that usage at the retail pump price, and Hanson would pay $31,670 in fuel - every day.

If he hadn't sharpened his pencil over the past year, his monthly fuel bill would be up by the same 35 percent that his per-gallon price rose.

But the company figured out ways to hold the overall fuel cost increase to 25 percent.

They instituted efficiencies: Computer controls limit engine idling to seven minutes, flat. Governors on the engines limit highway speeds a driver can travel. They run tires less than the legal limit so they keep more tread on the pavement and more miles in the gallon. They're testing tread design and tire brands to see what gives the best fuel mileage.

"And we monitor tire pressure very, very carefully," Hanson said.

NATIONALLY, gasoline at the pump averaged $4.04 for a gallon of regular on June 9, and $3.96 across Montana on June 12. The state's average price was up a nickel from a week earlier, and up 69 cents from its $3.27 level a year ago.

Kalispell's prices were close to that mark, with a high of $4.09 a gallon at one east-side station and a low of $3.92 at the north end of town. Twelve of the 20 stations checked Thursday morning were selling regular at $3.95 a gallon. It was going for $3.99 at five more, and $3.98 at one.

It's a level many people thought would never come.

Even at these unprecedented prices, Michael Hayes, an independent retailer and owner of two Michael's Convenience Store/Exxon locations in Kalispell, said his profit margins have tanked.

"I made more money on fuel when we sold it for $1.36 a gallon than I make now," Hayes said. He tries to get customers inside the store rather than having them pay at the pump and leave. "I make more money on the doughnut I sell them."

Hayes' stations are supplied by one of the world's biggest oil companies - Exxon, which made $83,000 a minute last year - but they aren't sharing the profits. That affiliation has worked to his detriment in some ways, forcing him to institute a pre-pay system at the pumps to thwart drive-offs.

"People get ticked off at the gas companies and don't pay for their gas," he said. "But they don't distinguish between the big company and the independent retailer."

What margin there is in selling retail fuel is quickly being gobbled up by credit-card companies. The surcharge for using a credit card now ranges between 1.75 percent and 3.5 percent per transaction at the pump, which can be upwards of 10 cents a gallon now. It cuts more into Hayes' take than ever before.

"The credit-card companies make more on retail fuel sales than do retail fuel sites," he said, citing statistics from the National Association of Convenience Stores.

PUBLIC transportation, in larger metropolitan areas, is becoming more popular as commuters look for a way around the pump prices.

But it's a different story with Eagle Transit, Flathead County's publicly subsidized transportation service operated under the Flathead County Agency on Aging for 23 years,

"The buses are far from full," Program Manager Cheryl Talley said. "I don't know why. I would think with the cost of gas, they would be riding them more."

She speculated people may not know of the service, and said she's been told that routes don't offer the convenience riders want. (Get information at 758-5728.)

This year Eagle Transit added commuter routes between Kalispell and Whitefish, Kalispell and Columbia Falls, and Columbia Falls and Whitefish - two runs for each route in the morning and another two in the evening. Those are in addition to the three city routes in Kalispell.

The extra routes were projected to boost ridership from 44,000 to 54,000 a year, but Talley said Eagle's nine buses have carried only half that increase so far. Delays in starting the commuter routes could be to blame. They didn't get under way until February, losing more than half of the county's July-through-June fiscal year.

Eight new buses that Eagle expected to put into use had "some operating problems," Talley said, and still are in the agency's shop on Kelly Road in Kalispell. When fixed, they will be shipped off to Glacier National Park where Eagle operates a summer transit service, and won't be available in the valley until September.

"We're not getting any more money from the state for this, and the price of gas has gone up," she said, parsing through the money woes. "It's all money related."

Even though the fees riders pay never cover the cost of public transportation, the low ridership is helping even less than hoped for when balanced against rising fuel costs. Out of its $1 million annual budget, about $150,000 goes for diesel and gasoline.

Talley said last year's monthly fuel bill ran around $3,000, but this year the price of fuel and the added routes helped more than double it to $7,000.

She's hoping bike racks on the buses will be a selling point to lure reticent riders who are conscious of their budgets, their health and the environment.

"When I came three years ago, I started buying all the buses with bike racks," she said, so riders can hop off the bus and onto their bikes to complete their commutes. "There's nothing cheaper than a bicycle."

Check for current fuel facts at http://zfacts.com/p/35.html

Reporter Nancy Kimball can be reached at 758-4483 or by e-mail at nkimball@dailyinterlake.com