The trickle-down effect of rising fuel prices and what it means for southern Utah – St George News

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ST. GEORGE- With rising fuel costs comes an inevitable increase in the cost of shipping goods and materials. For places like Washington County that rely almost exclusively on road transportation, this adds to costs that have already increased due to inflation.

Seedlings stopped at the Pilot gas station in St. George, Utah, March 24, 2022 | Photo by Mori Kessler, St. George News

Higher fuel costs generally mean higher prices everywhere for products shipped by truck, said Jim Andrus, president of St. George-based Andrus Transportation. He is also the current president of the Utah Trucking Association.

“Those who are most affected are the end consumers,” he said while estimating that up to 98% of the products imported into the county were by truck.

While rising fuel costs are “definitely hurting” businesses, Andrus said it wasn’t so much the rise in gas as how quickly the rise happened.

The contracts that trucking companies have with their customers come with a fuel surcharge to help cover fluctuations in the cost of fuel. As an example, Andrus said a company can charge 10 cents per mile on delivery from California to Georgia. This trip can take a week. It’s when fuel costs jump dramatically during this period that the problem arises.

Gasoline prices at a gas station in St. George, Utah, March 17, 2022 | Photo by Mori Kessler, St. George News

“You can’t go back to the client and say, ‘Hey, now I need that money back,'” Andrus said. “You Can’t Go Back”

In the future, however, this indicative 10 cent surcharge may need to be increased to help mitigate the impact of the loss.

Companies like FedEx and UPS base their fuel surcharges on the average price of diesel.

While large and small trucking companies will likely see their profits shrink, Andrus said he believes there is still enough demand for their services that most companies will be able to weather the current problem of the fuel.

“The misfortune and sadness for me is the fact that it’s the unknown,” he said. “I’d like to know where things stand so you can appropriately contract with customers on pricing.”

Semi-trucks stopped at the Pilot gas station in St. George, Utah on March 24, 2022 | Photo by Mori Kessler, St. George News

For now, this price must keep pace with rising fuel costs.

“It ends up costing us all in the end,” Andrus said. “The only way to compensate for this is to raise prices. Everyone will eventually pay. From fast food to groceries, everything is higher.

The causes of the increase in gas prices have been attributed to various factors, including an increase in demand after two years of slowing activity due to the COVID-19 pandemic, the administration’s domestic energy policy Biden and the current war between Russia and Ukraine.

As for how gasoline prices might be offset, some states have already suspended their taxes on gasoline and diesel fuel. It’s an idea some Utah lawmakers say they won’t buy into.

“I think that’s a pretty dangerous thing to do,” Rep. Brad Last, R-Hurricane, said Tuesday at a legislative forum held at Dixie State University.

Gas pump, St. George, Utah, March 26, 2021 | Photo by Mori Kessler, St. George News

Utah’s gasoline tax is 31.9 cents per gallon and is used primarily to fund the maintenance of state roads and pay state employees who service them.

“If you take out that gas tax, where are you going to get the money for the roads?” Last said.

While speaking with St. George News ahead of the forum, Sen. Don Ipson, R-St. George, called the idea of ​​suspending the gas tax “short-sighted thinking.”

Gov. Spencer Cox also noted at his monthly press conference held March 17 that if he allowed the suspension of the state’s gasoline tax, it would also result in the layoff of employees of the Department of Transportation from Utah.

“It’s a very bad idea,” the governor said.

Although gasoline tax in other states is used similarly, that hasn’t stopped Maryland from suspending its gasoline tax for about 30 days or Georgia from suspending its tax until May 31st.

According to the AAA, the average regular gas price in the St. George metro area is $4.57 per gallon. Just a month ago it was $3.57. Diesel currently costs more than $5 a gallon, up from $4 a month ago.

Since 10 gallons of regular gasoline would cost about $45.70, eliminating the state gasoline tax could save motorists about $3.20.

Copyright St.George News, SaintGeorgeUtah.com LLC, 2022, all rights reserved.

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