Businesses react to surge in gas prices
Daily Inter Lake | March 20, 2022 1:00 AM
The recent surge in gas prices is fueling operational adjustments across the Flathead Valley business landscape.
Donny Stevens, who runs a Columbia Falls trucking company, said his biweekly bill increased by $5,000 from one statement to the next.
“It’s affecting us big-time,” Stevens said.
Stevens’ fleet travels as far afield as Ohio and Texas, averaging just 5 miles to the gallon.
Stevens said he started stockpiling diesel as prices ticked higher over the past few weeks, so he has enough of a reserve to last his company for several months.
“I’m hoping the crisis blows over in the next few months,” Stevens said. “…I’ve got to keep my fleet running.”
Michael Taylor has a fleet of just one vehicle, but he too is feeling the effects of high fuel costs. Taylor runs The Uphill Grill food truck, which offers a variety of sandwich options.
Taylor said Flathead Valley residents should expect to see less of his mobile eatery going forward. Fuel prices are one of many factors that have convinced Taylor to forgo his food truck for a new brick-and-mortar restaurant in Helena.
Although Taylor will still vend at occasional Flathead events, he didn’t think there was any way his food truck could weather the fuel price hike.
“Unfortunately, we still have to have gas to get going,” Taylor said.
MANY BUSINESS leaders lamented adding surcharges to their services in order to offset the rising cost of fuel.
Bo Holst sells trees and other landscaping products at Rose Creek Nursery in Bigfork. He said adding a surcharge was an inevitability given his operation’s fuel consumption.
“I go through a lot of fuel with the machines we use,” explained Holst, who runs tractors and excavators throughout his farm.
Besides the surcharge, Holst didn’t foresee making any other additional changes to his operation in response to soaring fuel prices. But he is worried the added cost might dissuade would-be customers from utilizing his services.
“It may change some people’s minds,” he noted.
Kevin Smith is also adding a surcharge for his taxi services at Glacier Grab-a-Cab, but he feels confident that he can keep his service more affordable than competitors like Uber and Lyft.
Glacier Grab-a-Cab currently consists of a single vehicle, although Smith hopes to expand this summer.
Smith said he has already received interest from customers looking to avoid paying the high surcharge at larger companies.
“Increased costs are pretty tough for taxis,” Smith observed. He’s charging an additional 10% surcharge for gas now.
“It’s still worth it,” he said. “…People are going to pay it. They need rides.”
Clients also seem amenable to paying extra for new homes, according to Wyatt Curtis with Flathead’s Finest Construction.
“It’s driving up the total cost for jobs,” said the homebuilder. Curtis’ clients seem universally accepting of those higher prices, he said.
“Everybody understands it’s not us,” he added.
But he said it has been “strenuous” for the builder to try to provide accurate prices to clients. “We’re going to do the best we can, anyway,” said Curtis.
ONLY A few local businesses reported being able to avoid tacking on a fuel surcharge for the time being.
“It’s our preference to avoid [adding a surcharge], but there may come a time when we can’t do it anymore,” said Brian Clark, President and Chief Operating Officer at Fun Beverage.
Fun Beverage’s total fuel costs went up 51% from 2020 to 2021, and Clark said the company is continuing to see a rise in costs so far this year. In the past, however, Clark said Fun Beverage succeeded in making logistical changes to offset fuel costs. Buying hybrid vehicles and restructuring routes and schedules have both helped Fun Beverage avoid passing fuel costs on to consumers.
An increase in beverage prices has also helped keep Clark from adding a fuel surcharge, but he admitted, “there’s only so much we can do.”
Jared Tuck at Kalispell Kreamery shared a similar outlook. He said the dairy has so far managed to avoid upping its prices, but he wasn’t confident it would stay that way for the long-term.
“Fuel costs are inherent in everything manufacturing does,” said Tuck. He said the dairy strives for consistency, so it’s important not to have a “knee jerk” reaction to sudden changes like the spike in fuel prices.
Still, Tuck said, there may come a point when Kalispell Kreamery is forced to raise prices to meet its demand for fuel. “We hope to never reach that point,” he stressed.
Another industry that has avoided surcharges is the rental car market. Eric Martin at Avis said the business model is structured so that customers pay for gas themselves, and vacationers don’t appear to be dissuaded from renting cars.
“We’re seeing no decrease in demand,” Martin reported. “Our demand is still high.”
That’s the case across Avis locations in Montana, Martin added. The steady demand likely has to do with the socioeconomic status of tourists visiting places like Glacier Park International Airport, Martin theorized.
LOCAL GOVERNMENTS have not been spared the effects of rising fuel prices.
Whitefish Mayor John Muhlfeld said the Public Works Department is striving to conserve fuel through measures like reducing idling and sharing vehicles.
The city of Whitefish is also including a “Fuel Price Adjustment” in projects it’s currently bidding, so the city will be able to pay actual fuel prices instead of estimates. The “Fuel Price Adjustment” applies to Whitefish’s Spokane Avenue Watermain Replacement and the Texas Avenue Reconstruction Project.
In Columbia Falls, meanwhile, City Manager Susan Nicosia doesn’t anticipate fuel prices will result in many immediate changes.
“We are not changing any operations at this time,” she said, noting the city is only 2 square miles.
Leadership from Kalispell and Flathead County said they are waiting to see how gas and diesel prices factor into government operations.
“We’ll just modify as we need to,” said Kalispell City Manager Doug Russell.
“I can tell you we’re watching and reacting to the changes as they occur,” said Flathead County Commissioner Randy Brodehl in an email.
“We budget pretty carefully and we’re working with the county finance department to amend our current budget,” said Dale Novak, Flathead County Public Transit Director, noting the Mountain Climber public transportation system purchases its gas at a discount through the county.
“We do have reserves we can pull out of, but we are very concerned about how prices could affect us,” Novak told the Inter Lake.
The impacts of fuel prices going up are most likely to come to the fore when the municipalities set their annual budgets this summer.
There’s no indication that prices at the pump would fall by that time, according to Patrick Barkey, a forecaster with the University of Montana’s Bureau of Business and Economic Research.
“There’s no natural ceiling for gas prices,” Barkey pointed out. “They can go quite high. We need to be prepared for that.”
“It’s going to take some time to settle down,” he added.
Reporter Bret Anne Serbin may be reached at 406-758-4459 or email@example.com.