Fuel Prices Squeeze Businesses

By Jeff White

So, just how high will those fuel prices rise before relief arrives?

That question is on the mind of most Newtowners, not least of all the owners of businesses forced to stay on the road despite the increased costs of operating their vehicles and offering their services.

“Any business that is operating on the road is feeling a bit of a squeeze,” says Newtown resident Fred Pendergast, who owns a recycling company that has contracted with the town to provide curbside service for many Newtown customers.

Of course, Mr Pendergast signed his contract with the town before the gas price boom began, so now he finds himself, well, out of luck. With diesel fuel prices ranging between $1.51 and $1.59 per gallon, the cost of putting his three trucks on the road has grown considerably, especially when you consider each takes about 33 gallons of fuel at each fill-up and his trucks visit the pumps a minimum of twice every week.

“Who expected it ever to go up that high?” he wonders. “There’s really nothing you can do. You’ve got a job to do, and you have to do it.”

Mr Pendergast knows that every winter, the cost of diesel increases because it is so closely tied to the cost of home heating fuel. But after the cold months of winter dissipate into spring, prices usually rebound. Trouble was, they just kept rising this year, soaring to levels that exceed the highest winter prices during the worst years.

The prices are as high as John Johnson has ever seen them during his 17 years in business as an excavator. The Hi Barlow Road resident keeps three trucks and five pickups on the road, and figures he burns about a 100-120 gallons of fuel a day per vehicle. What has he done to offset this financial outlay?

Raise prices.

“We’ve got to pass the extra cost onto the customer,” he explains. “What else are you going to do?”

One of Mr Johnson’s workers who would normally cost $125 per hour for landscaping work now costs $135, and Mr Johnson concludes that he has increased prices by at least $10 for most services he offers.

“It’s not a good scenario, I’ll tell you that,” he says. “Almost everybody in landscaping is in the same boat.”

Not only does Mr Johnson do landscaping throughout Newtown, his business does work in neighboring towns, like New Canaan and Ridgefield. Luckily, he has not had to cut back on how far he travels on a job.

But Jim Walsh has.

Mr Walsh, who operates a mulching and wood chip business at the corner of Berkshire and Toddy Hill roads, has had to cut back, or in some cases discontinue, his delivery services to other states.

“What we’ve done is just try and divert the trucking people off the road as much as we can,” Mr Walsh explains. “We’ve tightened up our radius for delivery. We’ve concentrated more on targeting our closer customers.”

For Mr Walsh, that has meant keeping the delivery of mulch and wood chips, for the most part, inside Connecticut.

“We deal with commercial accounts, so companies are bidding on our products and expecting to pay the same prices,” despite the distance his trucks might have to travel, Mr Walsh explains.

But limiting delivery has not solved the problem completely.

The companies that supply Mr Walsh with his products have driven up delivery costs by charging surcharges to meet the financial burden of filling up their own trucks.

So, Mr Walsh says, it has meant that his business makes up the difference on its end. Although he has increased the price on a few of his products, for the most part he has shied away from requiring his customers to pay more. Mr Walsh has just focused on curbing delivery and attempting to run his machines more efficiently.

“We try to hold our price line, but it’s been difficult,” explains Mr Walsh’s father, Jim, Sr. “It’s difficult to hold the line, even with our old customers. But we just have to bite the bullet.”

The trouble is, no one knows how long this will continue.

Right now, no one seems to have an answer, least of all the government, in the minds of many Newtown businesses. Many business owners like John Johnson, Fred Pendergast, and Jim Walsh just hope that prices will break at summer’s end.

For Mr Walsh, he says he will not even be able to assess the financial impact of the current fuel inflation until the end of the year, when he goes to his books and works the numbers. Until then, he is just waiting.

But if there is any upside to the current state of things, it is this: everybody who drives from one place to another is dealing with it. That makes for understanding customers, at least in John Johnson’s mind.

“They know what it is, because they have to pay for it too, with the price of gas and everything,” Mr Johnson says.

How soon would they want fuel prices to return to a normal level?

“Yesterday,” Fred Pendergast laughs.