[2004 State of the Industry Report] Conserving Gas & Cash

After a summer that brought some of the highest gas prices in recent years, the reactions of PCOs have varied from a blasé attitude of "that’s life" to making major changes in the way their pest control businesses are run. Although many news stories and headlines have declared that prices reached all-time highs this past spring and summer, those prices were not adjusted for inflation. When taking inflation into account, the situation is not nearly so grim as it may appear.

In fact, the U.S. Energy Information Administration (EIA) says that if all prices are adjusted to today’s dollars, the all-time high was in 1981 at $3 per gallon. The highest national average this summer was $2.07, and at press time it was the lowest it’s been since early May: $1.87. There were predictions in the spring that prices would hit the $3 mark over the summer, but they proved to be false. However, prices are still 12 cents more expensive than a year ago. By regions, gas continues to be the most expensive on the West Coast and the cheapest on the U.S. Gulf Coast.

Prices reached such a high level in May due to concern that a shortage would hit over the summer, which is the peak driving season. People were worried that oil refineries wouldn’t be able to meet the increased demand. The world demand is growing quickly — the fastest it has in 24 years. According to reports, the Organization for Petroleum Exporting Countries is planning to increase output in response to the demand and the higher prices.

PCO REACTION. Jim Vaive, president, Varment Guard, Columbus, Ohio, is one of the PCOs that felt the pinch of gas prices enough to make some changes in his business. "We’re just trying to do the best we can," he said. They’re trying to do that by changing some of the company’s business practices. For example, Varment Guard added a fuel surcharge to help offset increased gas prices about nine months ago. Vaive felt they could no longer totally absorb the fluctuations. The surcharge is $4 per visit, and Vaive said it amounts to about half of the price increase.

"It’s not a lot, but when you do as much as we do, it adds up," he said. The company absorbs the other half of the increase. Vaive doesn’t foresee the prices going back down, but he said the surcharge won’t be removed even if they do.

Many PCOs have also worked on maximizing route efficiencies, and Vaive said Varment Guard is no exception — they’re trying not to run around as much as they did in the past. Besides that, the company’s budgeted amount for gas and vehicle repairs has been raised about 25 percent in preparation for the future. Technology is also a help in addressing the problem. All Varment Guard vehicles are equipped with GPS, so technicians’ driving habits are monitored to ensure that they are doing what they can to conserve gas. This includes not driving over 65 mph, not letting the vehicles idle and not accelerating too quickly.

"We’re trying to get people to follow basic driving habits that are good for the truck and for gas consumption," Vaive said.

Others say there are things more financially painful than gas prices. Al Roden, owner, Enviroco, Victoria, Texas, said he hasn’t upped any prices due to gas consumption. Yellow Page advertising and labor costs are more significant for him. "I may have to go up on my prices if Yellow Page advertising goes up anymore — that hurts me a lot more than gasoline," he said.

Another option PCOs have taken advantage of is cutting back the frequency of visits to customers, offering only tri-annual or yearly treatments instead of quarterly or bi-monthly. Gene Fowler, owner/operator, Fowler’s Pest Control, New Port Richey, Fla., is one PCO that’s chosen this approach. "Doing once a year and tri-annual service I can make a day’s revenue with much less travel," Fowler said. "Of course, gas prices were not the only reason for that decision, but it was a big part of it."

Roden has a similar approach in only doing annual services. He said that with annual service, vehicles are parked longer at customers’ houses, saving on gasoline, while technicians generate the same revenue as they would with four quarterly visits. "I can do a more thorough job — spending two to four hours at a house if I need to — and still make the same money I used to on quarterly work with a lot less running around," Roden said.

The author is a contributing writer to PCT magazine.