Comments on: Are Fuel Related Charges Here to Stay?

By: nickel

nickel — Mon, 03 Nov 2008 13:58:38 +0000

Dave, we rarely order pizza out, so it’s not a big worry for me either. But… It’s a sign of how things are going. Oh well, once the dollar re-weakens, gas prices will go back up and will be well again.

By: Dave

Dave — Mon, 03 Nov 2008 13:55:25 +0000

@nickel:

Heh. Actually, no I don’t. It’s not delivery, it’s Digiornos.

My lifestyle choices don’t include delivered pizza, so that’s one less thing I have to worry about.

By: Miss m

Miss m — Tue, 28 Oct 2008 18:06:43 +0000

My guess is they won’t go away anytime soon, those fees are a revenue source that might help prop up company’s bottom lines through the downturn. Plus consumers become used to the higher price, gas at $3/gal suddenly feels like a bargain even though it was just $2/gal a few years ago. Companies charge what the consumer will pay.

By: nickel

nickel — Tue, 28 Oct 2008 14:39:23 +0000

Dave: You know perfectly well what I’m referring to when I bring up pizzas. The delivery charge on a pizza applies to delivery from the pizza place to your house. That’s not done with diesel trucks, so the argument doesn’t hold. If they want to raise the price, fine. Raise it. But don’t tack it on as a BS fuel-related delivery charge.

By: Dave

Dave — Tue, 28 Oct 2008 14:22:47 +0000

Also — OPEC wants to cut production to drive oil prices back up. So the prices now are probably only temporary.

Plus we just finished the summer peak driving season…

By: Dave

Dave — Tue, 28 Oct 2008 14:20:23 +0000

@nickel #10: Yes, they are — the components that make the pizza are distributed from warehouses and delivered by diesel trucks. That cost is rolled into the overall cost of the pizza you buy.

@Rick #7: This is dead on. The dollar is suddenly a better investment for the FOREX traders because even though we are in a financial crisis we appear better able to weather the storm than say Europe and Japan. It turns out the single best thing we could do to drop gas prices wasn’t environmental at all, we just had to destroy the rest of the world’s markets with our securitized bad mortgages!

Remember too that the airlines (for one) and probably other major transports (trucking, buses, shipping, etc) can (and have a major financial incentive to) lock in their fuel rates under contract for to get favorable rates. Southwest Airlines did this and was paying a ridiculously low amount for fuel which was the reason they remained profitable the past few years. If I’m not mistaken their contract may have just run out, and suddenly they post a loss? Big shocka…

So if they locked in their fuel rates at $110 a barrel as a hedge against it hitting $200 a barrel, boy are they passing on the hurt to the consumers…

Just some guesses.

By: Daniel

Daniel — Tue, 28 Oct 2008 13:38:02 +0000

It’s kind of like government: once they get their hands into something, they don’t get out of it.

By: Nick

Nick — Mon, 27 Oct 2008 22:23:57 +0000

I’m not sure about all those extra charges, could go either way. But I imagine as something in one market, like baggage surcharges goes, the rest of the industry will be sure to follow suit. What strikes me is that the price of fuel has fallen so far so fast. I remember when we would watch the price of crude go up one day, and the price would be reflected the next day at the pump. Surprisingly, this has been more or less the case lately too with the dropping prices.

By: Aya @ Thrive

Aya @ Thrive — Mon, 27 Oct 2008 20:44:28 +0000

Of course they’re here to stay! It’s the same logic behind fare hikes caused by the supposed debt the transportation companies have to suffer with, and somehow after they’ve raised prices they discover some huge savings they forgot about. Do they lower the fares? Of course not; they justify it by saying that one of these days they WILL be in debt, and they want to stow away money for the future. Then again, realistically speaking, I wonder how hard it is to lower prices they’ve already increased and make adjustments based on that.

By: Aryn

Aryn — Mon, 27 Oct 2008 20:31:53 +0000

I think the fees will stick until one of the airlines decides to launch a price war involving the fees. If they succeed in luring customers by dumping fees, then the fees will recede, until the next time oil prices spike.

I’ve heard experts say the same thing about food prices – the higher prices will stick until someone launches a price war.

By: nickel

nickel — Mon, 27 Oct 2008 19:30:04 +0000

Ron: Pizzas aren’t delivered by diesel truck…

By: Ron@TheWisdomJournal

Ron@TheWisdomJournal — Mon, 27 Oct 2008 19:25:17 +0000

One thing to keep in mind is that diesel fuel hasn’t dropped in price very much. Most items that are delivered come by a diesel powered truck.

By: Aaron

Aaron — Mon, 27 Oct 2008 18:55:37 +0000

Thank you for providing me a reason to go through my bills and determine which companies I’ll be contacting to inform them their rates need to change. (It might also be worthy to note that the price of gasoline now is most likely LESS than it was when they raised the rates.)

By: Rick

Rick — Mon, 27 Oct 2008 17:33:12 +0000

The fees are here to stay. However, don’t think for a minute that $2/gal gas is here to stay. Soon enough it will shoot right back up to where it was. The primary reason gas is so much cheaper now is that the dollar is so much stronger. Did you realize that a GBP is now only $1.54, down from around $2.10 a year ago? The dollar has gained dramatically against most currencies (except the Japanese Yen), mainly from implications of the current credit crisis. This is the primary reason that gas is cheaper. Oil is priced in dollars, and the dollar is so much stronger.

It is also true that demand for oil has declined. Last I read, oil consumption dropped about 10% from a year ago. But again, this is mainly due to a temporary change of events — the weakening global economy. Once the world recovers from its recession, the demand for oil for rise again. And the supply of oil certainly isn’t getting any larger.

All this is to say, don’t get used to $2 gas. It won’t last.

By: Brandon

Brandon — Mon, 27 Oct 2008 16:17:26 +0000

They are probably here to stay unless prices stay lower for a long period of time. If that happens, there will probably be some market pressure to lower or eliminate fuel surcharges as an advertising ploy.

By: Shmuley

Shmuley — Mon, 27 Oct 2008 15:03:18 +0000

sorry, but if you think surcharges are going to go away, then you are living in la la land. time to vote with your wallet and only use services with the lowest surcharges.

By: Blaine Moore

Blaine Moore — Mon, 27 Oct 2008 14:36:39 +0000

Well, coming from a business perspective, fuel surcharges have always been around. UPS updates their fuel surcharges monthly and has for at least the past 6 years that I’ve been dealing with them, and those rates just happen to be about 300% higher now than they were then. Not that they are the only company, but it isn’t like fuel surcharges are necessarily a new concept. You probably just didn’t see it as blatantly obvious from the consumer end because it was always tucked away behind the scenes before in the normal prices you were paying.

By: gm

gm — Mon, 27 Oct 2008 14:04:28 +0000

I agree. Once rates are raised, companies will tend to keep it that way.

By: Tyler @ Dividendmoney

Tyler @ Dividendmoney — Mon, 27 Oct 2008 13:56:20 +0000

I know that Carnival Cruise lines is going to refund my colleague’s fuel surcharge for a cruise that was booked last January if the price of oil drops below $70/barrell for 20 consecutive days.

By: KC

KC — Mon, 27 Oct 2008 13:42:23 +0000

I remember the first time I encountered these about a year and half ago. I’d called a plumber to my house and the company charged me a $5 fee for him to drive the 2 blocks to my house. Next time I need them I’m going to negotiate this fee as silly as it sounds, but I am only 2 blocks away and that’s the whole reason I called them – they were in my hood!

But yes, these fees are here to stay and are lower gas prices (at least lower than $3.50/gal.)