Drivers and businesses feeling more pain at the pump
by Martin Moylan, Minnesota Public RadioConsumers are certainly feeling some pain at the gas pump, as they fill up their cars with fuel that costs about ten percent more than it did a few weeks ago.
According to AAA, gas prices average $3.18 a gallon in Minnesota.
Business are suffering at the pump, too. But they're not necessarily eager, or able, to pass on their higher fuel costs. Many businesses are absorbing higher fuel costs, worried that raising prices could cost them customers.
St. Paul, Minn. — With delivery trucks that get seven to 13 miles a gallon, Simon Delivers is getting hit hard by the recent run-up in fuel prices. Each of the online grocer's drivers visits 30 to 40 homes a day, dropping off orders customers submit online. But so far, the grocer has not tried to pass on its higher fuel costs to customers, figuring that move could drive away some customers.
"We're trying to hold the line," said Chris Servais, Vice President of Operations for New Hope-based Simon Delivers.
Simon Delivers may install voice-based navigation systems in its trucks to try to assure drivers reach their destinations with maximum efficiency. And Servais said the company hopes more shoppers will see Simon Delivers as a greener and more cost-efficient way to shop for food.
"The miles that we travel in servicing 30 to 40 deliveries is much less than 30 to 40 customers going out to the grocery store and coming back and traveling to the local bread place or fish monger," he said.
Simon Delivers isn't the only business that figures it could get a boost from higher fuel prices.
Dave Clark runs Skyline Shuttle, which ferries people between Duluth and the Twin Cities airport and other destinations. Clark has not raised his fares, hoping to make his service even more appealing as fuel prices rise. "You know, we're starting to get to the point with these higher gas prices that our price is cheaper than you could drive, depending on what kind of vehicle you have," he said. "Our round-trip fare is $68 If you're driving a large SUV you could easily burn that much in fuel driving."
But Clark worries that if gas prices jump too much, they will drag down the economy and cost him customers.
"People may be taking less vacations and air traveling less because of a slower economy and that would hurt," he said. "So, I couldn't say I would love to see high gas prices, because that could reduce the number of people air traveling. And that's my primary market."
To be sure, many, if not most, businesses see no upside in higher gas prices.
Shaan Aziz said competition keeps him from passing along higher fuel costs. Aziz owns A Accent Towncar & Limo Service in St. Paul. He's paying $200 to $300 a day to gas up the ten vehicles in his fleet.
Aziz said that if he raises his prices he risks losing business to rivals who are eating higher fuel costs.
"I'm assuming it's going to go to $4 a gallon," he said. "I have no choice but to raise the fares, I guess. Because if I don't raise the fares, I will lose. Basically, you cannot keep yourself in business."
There's no problem staying in business these days for car dealers that have lots of fuel efficient vehicles to sell to consumers looking to get more miles per gallon.
"Their interest is certainly switching to the hybrids, no doubt about it," said Dick Sjoquist, who owns Burnsville Toyota.
Sjoquist said there are more folks interested in buying Priuses and other hybrids and than there are cars to satisfy them.
"It's a boon to us, in terms of Toyota having the vehicles available with high gas mileage and better efficiency," he said. "So, we're experiencing a better year this year than last year. We're pretty fortunate."
Sjoquist said sales of standard fuel-efficient cars such as the Corolla and Rav4 are up about ten percent. Meanwhile, sales of bigger Toyota vehicles like the Tundra truck are down about 30 percent.
It's not a very good time, though, Sjoquist said, to trade in a big gas-guzzling SUV. Many of those vehicles are going for about 60 percent of their normal value.
