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Thursday, Mar 28, 2024

Gas Prices Putting Pressure on Companies

Gas Prices Putting Pressure on Companies Firms Struggling With Cost of Doing Business By CARLOS MARTINEZ Staff Reporter Chris Gaff is in the middle of the gas-price battle being fought by many local businesses. As head of Marfred Industries’ transportation division, Gaff has seen fuel prices jump by nearly 30 cents in the past month and his firm, like others, is wondering whether to pass on the increased costs to customers. “You just don’t know what to do at this point because things are constantly changing,” said Gaff, who oversees the operation of the corrugated cardboard box manufacturer’s 26-truck fleet. Since Feb. 10, when fuel prices began increasing steadily, the U.S. Energy Department said prices have increased by 15 cents on the average. In Los Angeles, a survey by the Automobile Club of Southern California showed prices increased from an average of $1.75 on Feb. 10 to $1.88 on Feb. 21 a 9.2 cent jump over the previous week. But this is well below the all time record price of $2.03 on May 25, 2001. “Unless you’re FedEx or UPS, there’s not much you can do, but pay the going price,” Gaff said, referring to the two companies which are able to negotiate long-term deals for fuel at set rates. Marfred, a 60-year old company in Sun Valley, has seen the price for diesel fuel jump nearly 20 cents over the last three weeks. “We normally spend about $20,000 per month, but we’re probably looking at $22,000 to $25,000 this month,” Gaff said. “It’s supposed to be low season for gas prices, so nobody expected this huge price jump,” he said. Marfred’s truck fleet has continued to deliver boxes to its clients without increasing its delivery fees, despite the growing fuel prices. But even Gaff is wondering whether the company should consider passing the higher costs to its clients. He said the company’s truck routes are already being run as efficiently as possible. “If these prices continue climb, then it’s going to be a problem and we’re going to have to make a decision,” he said. Likewise, K.C. Jones, chief executive of Accurate Telecom Inc., a Van Nuys-based telecommunications equipment provider and installer, said his company is also considering passing along higher fuel costs to customers. “On a gut level, I would rather not pass on the costs to customers because that would be antagonistic and it would not be appreciated by customers, so we’re waiting and seeing,” he said. Accurate operates 19 vehicles which service customers throughout the Valley and surrounding area. But the company’s average fuel bill of about $2,000 per month is already nearing the $3,000 mark. “The last time we had these high prices, back in 2001, we didn’t raise our prices and it was about the same as it is now,” he said. Jones said that if prices continue to increase past $2 per gallon, over the next month, his customers will have to pay for it. “You hate to do that, but that’s where things seem to be going,” he said. The higher fuel prices are being blamed on instability in the oil market and the threat of war in Iraq. “Threats of war and oil strikes in Venezuela and Nigeria continue to push prices upward,” said Carol Thorp, a spokeswoman for the Automobile Club of Southern California.

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