Feeling Pain At The Pump

May 28, 2004|By MEREDITH COHN, JUNE ARNEY AND PAUL ADAMS | MEREDITH COHN, JUNE ARNEY AND PAUL ADAMS,SUN STAFF

Across Maryland, fuel is the essential ingredient of economic life. For many small businesses, a 20 percent or 30 percent increase in the cost of gasoline or diesel fuel can move a profitable operation dangerously into the red. Many small-business owners and executives worry that that's just what the recent rise in fuel prices is doing to them. Others are less concerned. Here are some of their stories:

DELIVERIES

Couriers weigh carrying costs on to customers

To cope with higher gas prices, Margaret Athas, owner of Belvedere Florist in Baltimore, delivers bouquets on foot whenever possible. But when customers want their flowers, she said she just has to get in the truck.

Athas and others who deliver goods across the region say higher gas prices an make the difference between making money and losing money. Some have applied surcharges; others, whose drivers pay for fuel, are considering raising their compensation.

"We haven't raised our delivery fee as yet," Athas said, which has remained at $7.50 for the past several years. No fee if she can walk.

But Joe Rimback, manager of Acme Delivery and Messenger Service, said his 16 trucks go through his 4,000 gallons of gas in about month. He added a surcharge of about 10 percent.

His gas, guaranteed by his distributor, costs him more than other motorists pay because it's delivered. He now pays $2.09 a gallon

"We're taking a real beating," Rimback said. "We have to pass it on. ... Customers know that's what happens. No one has complained."

John Smith, manager of the Domino's Pizza in Columbia, said he hasn't heard much complaining from his delivery people, who pay for their own gas and earn most of their wages from tips.

They store sends out more than one order with a driver only if customers live close by. Domino's doesn't want them to have to wait.

"There's been talk about a mileage increase; they get less than $1 per order now," he said. "We all know it's pretty outrageous to pay $2 for a gallon of gas."

AIRPORTS

For many fliers, another hurdle

Rising fuel prices have dealt another blow to general aviation airports and flight schools, which have already suffered a huge decline in business since the federal government imposed security-related flight restrictions over the Baltimore-Washington corridor last year.

"Now that we have the fuel crunch on top of the [security] restrictions, we have a double whammy in terms of total impact," said John Kirby, who has been in the aviation business for 37 years and is manager of the Bay Bridge Airport in Stevensville.

The airport recently had to raise fuel prices by 22 cents to nearly $3 a gallon. That comes on top of previous increases.

Kirby said the airport, which has seen its business decline by about 50 percent since the security restrictions were enforced, may consider forming a fuel club, in which pilots could purchase fuel in advance as a hedge against future increases.

But the Aircraft Owners and Pilots Association says it is unlikely that pilots will quit flying because of fuel prices. When you factor in the cost of the airplane and insurance, fuel accounts for just a small fraction of the cost of operating a plane, said Jeff Myers, a spokesman for the Frederick-based association. But some may cut back slightly on discretionary trips, much as they do with their cars, he said.

"Very few pilots will say, `I'm going to sell my airplane because gasoline goes up,'" he said.

HUMMERS

Behemoth sales right on target

At recent count, Anderson of Hunt Valley had sold 10 Hummers this month despite the paltry 10 miles to the gallon they get around town and the 12 or 14 miles on the highway.

And Hummer salesman Tim Kleim still hopes to reach the dealership's goal of 15 to 20 a month by the time the big Memorial Day push is over.

Hummers, which have a base price of about $50,000, are not typically purchased by people concerned with gas mileage, Kleim said.

"There's still a demand for them," Kleim said. "If you can afford the truck, you can afford to fill the tank."

In fact, many Hummer customers are used to putting premium in their BMWs or large SUVs and find the Hummer's appetite for regular gas a refreshing surprise, he said.

"The Hummer just burns regular 87 octane," he said. "They're really shocked."

TOUR BUSES

`Taking a beating' on early bookings

With a fleet of charter buses that get about six miles to the gallon, Faisal Khan, is suffering with deals he made months ago when the gas prices offered no hint of skyrocketing.

"Most of our customers book three or four months in advance," said Khan, owner of Capital Executive Limousine Inc., with locations in Baltimore and Manassas, Va. "We did not foresee this gas price increase. So we're taking a beating."

By the end of the year, Khan estimates, the increased gas prices will have cost him tens of thousands of dollars, based on diesel increases from $1.60 to almost $2.00, he said.

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