[State of the Industry] Pain at the Pump

Every day there are news stories related to the high cost of fuel. Airlines are increasing prices, reducing flights and laying off employees. Delivery companies are adding fuel surcharges to help offset costs. And there’s no doubt that pest management professionals, too, are feeling the pain at the pump. But what are pest management companies doing to battle rising fuel costs?

INCREASING PRICES. Joe D’Ambrozio, president of J. D’Ambrozio Pest Management Services, Paramus, N.J., says that pest management companies should increase overall prices to cover increasing fuel costs and build the increase into the pricing structure for new customers.

“Everything is going to continue to go up,” says D’Ambrozio. “Pest management companies need to make it a habit to increase prices every year to help cover the rising cost of fuel.”

D’Ambrozio suggests having two types of price increases — a small percentage for current customers and a higher percentage for new customers. He gives current customers two months’ notice before a four- to 10-percent price increase.

“We review every account to evaluate each client and determine a reasonable price increase for each one,” D’Ambrozio said. “We’re honest up front and everyone understands. In fact, we increased our prices again in January and haven’t lost a customer yet.”

In addition, every month the company reviews its current pricing for new customers. “For new customers, our prices this year are 30 percent higher than they were last year at this time,” he said.

Other companies are adding a fuel surcharge that is updated monthly and itemizing the charge on the customer invoice. Rather than raising the overall charge for your services, adding a surcharge for fuel suggests to customers that you are simply trying to recoup costs.

The Department of Energy’s Web site, www.eia.doe.gov, posts a weekly report of gas prices that a company can use to show customers an objective price report to support the charge, and when the price goes down, the surcharge will as well.

EVALUATING AND TIGHTENING ROUTES. Many companies are evaluating routes to consolidate as much as possible, some taking a page from shipping giant UPS, which designs its drivers’ routes to avoid turns across traffic. Reducing the amount of left turns a driver makes each day saves time, reduces idling and reduces fuel consumption.

At J. D’Ambrozio Pest Management Services, the firm has moved to daily routing to be more efficient and reduce fuel use. “We have found that between April and June we saw an 8-percent reduction in gas cost by consolidating our routes this way,” D’Ambrozio says. “When we run across a customer that is out of a particular area, we call them to reschedule when it’s convenient for us. With the cost of gas the way it is, they understand and are happy to switch.”

ADJUSTING DRIVING HABITS. Driving responsibly can help reduce a vehicle’s fuel consumption: Accelerate slowly from a stop, don’t speed, use cruise control and reduce idling when possible. In addition, making sure tires are properly inflated and keeping up regular vehicle maintenance can also help.

Bryan Houtchens, vice president and chief operations officer for Team Too Termite & Pest Control in Corona, Calif., took these suggestions one step further. He not only switched from gas-powered to electric-powered spray rigs and replaced his service fleet with smaller trucks to save fuel; he hired a mechanic to help make the vehicles run more efficiently. The mechanic reprogrammed each vehicle’s computer so they accelerate gradually from a dead stop and go no faster than 65 mph.

”Even with the gas pedal pressed to the floor, the vehicles don’t accelerate past 65 miles per hour,” Houtchens says. “As a result, our trucks are getting four to six more miles per gallon and we are seeing a big reduction in wear and tear.”

INVESTIGATING ALTERNATIVE FUELS. As a graduate of Washington State University’s Wildlife Biology Program, Jack Thompson, owner of A All Animal Control of Puget Sound, never dreamed he would one day make his own fuel using french fry oil. But after spending a year serving in Iraq, he decided he was no longer going to contribute to foreign oil and decided to find an alternative.

“It just happens to be that the decision to get away from petroleum has been a good one,” Thompson says. “Not only is it helping me on a philosophical level, but on a financial level as well.”

When he returned from Iraq, Thompson began researching a variety of domestically produced fuel sources — ethanol, biodiesel, natural gas and propane-based fuels. Ultimately, he decided on biodiesel and bought a diesel truck. After more investigation, however, he realized he could make his own fuel and began doing just that.

“I contracted with four restaurants to collect their used cooking oil, and immediately dropped my monthly fuel bill from $400 each month at 2006 prices down to about $100 a month,” said Thompson. “I still have to use a minimal amount of commercial biodiesel because I can’t produce 100 percent of my own but I reduced my fuel bill by 75 percent.”

As prices continued to rise, he began looking for other ways to reduce costs and recently installed a hydrogen booster on his vehicle. The booster takes electricity out of the alternator and uses it to produce a hydrogen/oxygen gas that is reinserted into the engine to provide a catalyst. His monthly fuel bill dropped to just $80 per month.

“I drive about 3,000 miles each month so that comes out to two-and-a-half cents a mile that I’m paying for fuel,” Thompson says. “I have a full-size diesel F250, and I’m getting about 26 miles to the gallon on fuel that is essentially free.”

Thompson says he found all of his information online by typing “alternative fuels” into a search engine, and purchased the conversion and hydrogen booster kits through the Internet. Today he’s doing his share to support the United States, his wallet and the environment, he says.

“Not only am I using a renewable fuel in the form of vegetable oil, but also it’s recycled because it’s already been used as an oil to cook french fries,” Thompson adds.

KEEPING UP-TO-DATE ON TAX BREAKS. In July, the Internal Revenue Service announced an increase in mileage deduction from $.505 for the first six months of 2008 to $.585 for the last six months of the year. Let’s say you drove 20,000 miles in 2008 — 10,000 from January to June and 10,000 from July through December. For the first half of the year, you could deduct $5,050. For the second half, $5,850. All together, $10,900 would be your mileage deduction for 2008.

Tips for Better Gas Mileage

Here are 10 tips to help keep fuel costs in check from the U.S. EPA:

1. Drive Sensibly. Aggressive driving can lower gas mileage by 33 percent at highway speeds and by 5 percent around town.

2. Observe the Speed Limit. Gas mileage usually decreases rapidly at speeds above 60 mph.

3. Remove Excess Weight. An extra 100 pounds in your vehicle could reduce your mileage by up to 2 percent.

4. Avoid Excessive Idling. Idling gets zero miles per gallon.

5. Use Cruise Control. Using cruise control will, in most cases, save gas.

6. Use Overdrive Gears. When you use overdrive gearing, your car’s engine speed goes down.

7. Keep Your Engine Properly Tuned. Fixing a truck that is noticeably out of tune can improve its gas mileage by 4 percent.

8. Check and Replace Air Filters Regularly. Replacing a clogged air filter can improve gas mileage by as much as 10 percent.

9. Keep Tires Properly Inflated. Improve gas mileage by around 3.3 percent by keeping tires inflated to the proper pressure. 

10. Use the Recommended Grade of Motor Oil. Improve gas mileage 1 to 2 percent by using the manufacturer’s recommended grade of oil. Also, look for motor oil that says “Energy Conserving.”

Editor’s note: Visit www.fueleconomy.gov for the most fuel efficient vehicles from 2008, gas mileage estimates and more information for 1985-2009 model year cars.

Why are retail gasoline prices so high?

The Energy Information Administration (EIA) analysis of the petroleum market points to the cost of crude oil as the main contributor to the record high gasoline prices the United States is now experiencing.

The cost of crude oil now accounts for about 70 percent of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand (think China and India) relative to supply. Other contributing factors include political events and conflicts in some major oil-producing regions, for example.

Gasoline prices are often the main topic of “This Week in Petroleum” at tonto.eia.doe.gov/oog/info/twip/twip.asp. For EIA’s latest gasoline price forecast, see “Short-Term Energy Outlook."