CLEVELAND, Ohio — Just about everything Cactus Jack Landscaping does, whether it’s trimming a hedge or mowing a lawn, runs on fuel. And so every service Jack Kinzie’s company provides is getting more expensive to provide.
Whether it’s the company truck running on diesel, the leaf blower running on an oil-gas mix or an added fuel surcharge when he’s buying mulch, Kinzie said there’s too many costs to absorb without increasing his own prices.
“You really feel it at the pump now,” Kinzie said.
The story of rising prices, even rising fuel prices, hurting businesses isn’t new, but Greater Cleveland companies are dealing with $5-a-gallon gas prices for the first time. Many commercial applications need diesel, which is coming at an even greater cost.
According to the American Automobile Association, a gallon of regular gas in the Cleveland metropolitan area was $5.05 Monday and diesel was $5.96. Just a year ago, regular gas was $2.91 and diesel was $3.34.
Kinzie said in a normal year he’d spend $25,000 to $30,000 on fuel; this year he expects to pay double that. This comes in the middle of rising labor costs, where his 5-person company is currently 3 to 4 people short.
He says he now has fuel prices written into his contracts. There aren’t many ways to save fuel, either. Most battery-operated landscaping tools don’t have the runtime, he said, to replace his gas-powered ones. And all the materials he buys, whether it’s fertilizers or plants, are affected.
Marcy Robbins, owner of Berman Moving & Storage, said it’s not a surprise fuel prices are hurting her business, and they’re bearing the brunt of the costs.
“It’s hitting our margins fairly significantly because we need fuel to function,” Robbins said.
Berman handles commercial and residential moves, along with some delivery work, and has nine trucks and a tractor-trailer in its fleet. Filling up a truck’s fuel tank now costs about $150, up double from a year ago, Robbins said.
When they give a quote for a move, Robbins said prices are guaranteed for 90 days. In the last 12 weeks, diesel prices nationally have jumped 58 cents a gallon.
Robbins said the company has a fuel surcharge, but it’s not near enough to absorb the costs, and the high prices aren’t being fully passed on to customers.
“It eats into our margins significantly, but it’s not the customers’ fault,” she said.
She said they’ve tried to run six trucks, instead of nine, when they can. The company has told drivers not to idle when possible, but turning trucks on and off also uses more fuel.
It’s a problem she’s frustrated with, but doesn’t have any answers, Robbins said. But she knows it’s having ripple effects since just about every product needs a truck to get it somewhere.
“If you think about it, almost all businesses need to use some kind of fuel to make their business go,” Robbins said.
Record high gas prices are expected to get higher, according to Patrick De Haan, head of petroleum analysis at price-tracking website GasBuddy. U.S. gasoline reserves have fallen since March, while demand for gasoline has increased going into the summer. Gas prices are still feeling the effects of the COVID-19 pandemic and the Russian invasion of Ukraine.
“It’s a perfect storm of factors all aligning to create a rare environment of rapid price hikes,” De Haan said. “The situation could become even worse should there be any unexpected issues at the nation’s refineries or a major hurricane that impacts oil production or refineries this summer.”