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MANAGING HIGH FUEL COSTS Q&A with Ken Burdullis, president, AG RX, Oxnard, CA
Jul 1, 2005 12:00 PM
AG RX is a full-service ag retailer providing products and services to growers from northern Los Angeles County to southern San Luis Obispo County in sunny southern California. California and other western states experienced some of the country's highest fuel costs this spring.
What was the highest gasoline price in your area this spring? What was the highest diesel price?
The highest price for regular unleaded this spring was $2.75/gal.; diesel was more than $2.80/gal. At the end of June, prices were back up to the spring highs.
By what percentage have higher fuel prices increased your fleet costs this year?
Fuel costs are up by 19% over 2004.
By what percentage have higher fuel prices increased your custom application costs this year?
Twenty-percent fuel surcharges on most of our deliveries have increased the price of the products we buy, and these surcharges are changing on a monthly basis.
What are you doing to manage these increased costs?
We're making sure we're getting the most out of the miles we're driving. For example, we're trying to make sure our delivery rigs aren't making two trips when they could make one. We are considering raising custom application charges to bring our charges in line with costs.
Do you believe that fuel prices will continue to remain high? If so, how do you plan to manage your application programs?
In California, our application season is year-round, and it looks like fuel prices will remain high. We just have to continue monitoring our costs and doing things more efficiently in areas where we can better control costs.
Full-service dealerships don't have many other options. We may review our fleet credit cards and see if we can buy fuel at a reduced rate.
What short-term and/or long-term effects do you think high fuel costs will have on the ag retail business?
Higher fuel prices are small compared to what we've been facing with workers' comp and rising health insurance rates over the last four or five years. These, in addition to more regulations, are much larger issues.
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