ST. GEORGE — With a rise in fuel costs comes an inevitable increase in the cost of shipping goods and materials. For places like Washington County that rely near-exclusively on road-based shipping, it adds to costs that have already seen increases due to inflation.
Higher fuel costs generally translate to higher prices all around for products shipped in by truck, said Jim Andrus, president of St. George-based Andrus Transportation. He is also the current president of the Utah Trucking Association.
“The ones that get hit the worst are the end-consumers,” he said while also estimating that up to 98% of the products brought into the county were brought in by truck.
While rising fuel costs are “definitely detrimental” for business, Andrus said it wasn’t so much the rise in gas as much as how quickly that rise occurred.
Contracts trucking companies have with clients come with a fuel surcharge to helps cover the fluctuating cost of fuel. As an example, Andrus said a company may charge 10 cents per mile on a delivery running from California to Georgia. That trip can a take a week to complete. It’s when fuel costs make a dramatic jump during that time that causes the issue.
“You don’t get to go back to the customer and say, ‘Hey, now I need that money recouped,’” Andrus said. “You don’t get to go backward”
Going forward, however, that illustrative 10 cent surcharge may need to be bumped up to help lessen the impact of loss.
Companies like FedEx and UPS base their fuel surcharges on the average diesel gas price.
While both large and small trucking companies will likely see cuts in profits, Andrus said he believes there is still enough demand for their services that most companies will be able to ride through the current fuel issue.
“The doom and gloom to me is the fact it’s the unknown,” he said. “I wish I knew where things were at so you could contract appropriately with customers as far as pricing.”
For now, that pricing needs to keep up with the hike in fuel costs.
“It ends up costing us all in the end,” Andrus said. “The only way to compensate for it is by raising prices. Everybody’s got to pay it eventually. From fast food to the grocery store, everything is higher.”
Causes for the increase in gas prices have been blamed on various factors including a surge in demand following two years of slow activity due to the COVID-19 pandemic, the Biden administration’s domestic energy policy and the current Russia-Ukraine war.
As for how gas prices could be offset, some states have already suspended their taxes on gasoline and diesel fuel. It is an idea some Utah lawmakers say they will not entertain.
“I think that is a pretty dangerous things to do,” Rep. Brad Last, R-Hurricane, said Tuesday during a legislative forum held at Dixie State University.
Utah’s gas tax is 31.9 cents per gallon and primarily goes toward maintenance funding for the state’s roads and paying the state employees that see to it.
“If you take that gasoline tax off, where are you going to get the money for the roads?” Last said.
While speaking with St. George News prior to the forum, Sen. Don Ipson, R-St. George, called the idea of suspending the gas tax “shortsighted thinking.”
Gov. Spencer Cox also noted during his monthly press conference held March 17 that if he allowed for the state gas tax to be suspended, it would also result in having to layoff employees of the Utah Department of Transportation.
“That’s a really bad idea,” the governor said.
While the gas tax in other states is used in a similar manner, it hasn’t stopped Maryland from suspending its gas tax for approximately 30 days or Georgia from pausing its tax until May 31.
According to the AAA, the average price of regular gas in the St. George metro area is $4.57 a gallon. Just a month ago it was $3.57. Diesel is presently over $5 a gallon compared to $4 a month ago.
As 10 gallons of regular gas would run around $45.70, taking off the state gas tax could save motorists around $3.20.
Copyright St. George News, SaintGeorgeUtah.com LLC, 2022, all rights reserved.