Businesses' Surcharge Fees Drop With Gas Prices
MINNEAPOLIS (WCCO) – Minnesotans are starting 2015 with the cheapest gas prices we've seen in five years.
According to AAA, the average price for a gallon of gas in the Twin Cities is $2.03. That's 14-cents cheaper than a week ago, and far cheaper than the $3.24 we were paying last January.
Gas prices have fallen for three months and while businesses are enjoying the savings, many still remember when gas topped $4 a gallon.
At Chez Bloom, floral design drives this budding business. Flowers may be the daily focus but the cost to get deliveries to customers is never far from mind.
"There's only so much you can charge for delivery of flowers," Tony Parsons, owner of Chez Bloom in Minneapolis, said.
With gas at its lowest point in years, Parsons is enjoying the savings. But he knows how quickly a fuel cost increase can impact the bottom line.
When gas prices push up the cost of his delivery service, he says he doesn't pass that along to customers.
"We have seen surcharges go up. Percentage-wise, we've gone from 3 percent up to 7 percent," Parsons said.
Local courier Map Transportation delivers for Chez Bloom. Map Transportation owner Lynn Graves has a unique understanding of the ebb and flow of oil prices.
Each day his 80 drivers drop off deliveries, putting anywhere from 160 to 600 miles on the road.
"It's just the cost of doing business," Graves said.
Like many businesses, to offset the ever-changing price of gas, Lynn implements a surcharge. The fee follows the price at the pump and he says it's easy to remember the $4 spikes of 2008 and 2013.
"That hits home. It's survival time when you see gas is pushing the $4 mark. It's pretty nasty," Graves said.
But with falling prices, Lynn's surcharge fees have dropped by 25 to 30 percent in recent weeks. A temporary savings in a market where prices are constantly changing.
"We're loving it, who isn't loving it right now?" Graves said. "I think this is kind of an enigma. If you look at diesel, we know that hasn't gone down that much."
Some businesses choose to offset fuel costs with a fixed rate.
But Lynn says that can be an even bigger hit to business if the prices rise higher than expected for longer than expected.
