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O.C. firms cope with soaring gas prices
By Jan Norman
Last year, when private investigator Thomas Martin was preparing the 2012 budget for his Newport Beach agency Martin Investigative Services, he planned on the price of gasoline rising to $4 a gallon. It was $3.70 at the time.
As of Friday, the average price of a gallon of regular gas in Orange County was $4.36, 9 percent higher than Martin anticipated. Some experts forecast $5-a-gallon gas by summer and diesel even higher.
A quarter of Martin’s business involves surveillance for corporate America, insurance companies or attorneys. With the soaring prices, “if we have 20 surveillances on a given day, the cost could easily reach $2,000 a day in gas alone,” Martin said. In summer, “our costs will rise as we run the vehicles while stationary to keep the investigators and video equipment cool. We often go through half a tank of gas while stationary.”
A year ago, regular gas was selling for $3.77 a gallon, and diesel, $4.12, according to AAA.
And the rising prices impact more than delivery trucks and gas stations. Among those hit locally are a fireplace manufacturer, a home health care provider, an Internet retailer, a business consultant, a restaurant, an electrical contractor, a security systems company, a medical transcription service and a caterer.
The variety says a lot about how rising prices of one commodity spreads throughout the economy.
On the other hand, one entrepreneur said her business is helped by higher gas prices. Irene Kinoshita, president of Ascolta, an Irvine-based online training company says, “We do technical, instructor-led training, so I think rising gas prices will continue to increase the demand for our virtual classroom training. Almost all of our courses are now available online.”
Higher gas prices hit in a variety of ways. Heather Yost, who owns the Senior Helpers franchise in Yorba Linda, said her caregivers drive to clients’ homes to assist them and to take them on errands and doctors appointments.
Buena Park consultant Mike Beard, managing partner of Value Based Project Management LLC, is hit by soaring gas prices because he goes to clients’ offices. “Spending more on gas reduces my profit and right now (profit) margins have not yet come back to 2006 levels.”
Plums Café and Catering in Costa Mesa is hit by higher prices for goods and services as vendors add the higher cost of gasoline to their bills, said owner Kim Jorgenson.
Mott’s Doll house Miniatures & Doll House Shop, Inc., a Placentia Internet business, has rising costs because rising gas prices, says owner Chris Mott. Delivery companies such as FedEx and United Parcel Service typically add a fuel surcharge with prices spike, Mott said. “Of course, the next impact happens a little slower and that is decreased sales. People have to get to work and so as their costs to work go up, they decrease their discretionary spending. That means my products.”
Fireplace manufacturer Mark Klein, CEO of FMI Products LLC in Santa Ana said the rise in diesel fuel prices has increased his firm’s freight costs.
Diesel is selling for an average of $4.50 in Orange County, up 28 cents from last month. All Orange County business owners contacted by the Register expect the prices of diesel and gasoline to continue to rise.
“The California Energy Commission estimates that California drivers already pay up to 15 cents a gallon extra as a result of the stringent requirements from the Air Resources Board for reformulated gasoline,” said Ron Stein of PTS Staffing Solutions in Irvine. “Now the manufacturers of our transportation fuels estimate that implementing the California Global Warming Initiative may be as much as another 50 cents a gallon by 2014 and $1 by 2018.”
Most small-business owners said they aren’t increasing their own prices to recoup their high fuel bills. Some, like investigator Martin, and seniors caregiver Yost do break out the higher gasoline prices on their invoices.
“We have a separate mileage fee on every bill,” Martin said. “We list the total miles driven to coincide with the report of our activities.”
Senior Helpers franchisee Yost said her franchise system has software that matches caregivers to clients who live closest to each other to save gasoline. Generally a caregiver is assigned within five miles of her home. Yost said her firm doesn’t add a fuel surcharge to the bill, but if the caregiver uses her own vehicle, the client pays 55.5 cents a mile, the allowance given by the Internal Revenue Service for business use of a personal vehicle.
JMG Security Systems in Fountain Valley has about 30 vehicles traveling Southern California for service and installation work, said President Ken Jacobs. “We ask our dispatchers to use the most cost-effective routing when sending service out. We are committed to same-day service, and we won’t compromise on that. “We also ask our drivers to keep the speed down and to drive only to the job sites and back.”
Even sole proprietors use gas-saving techniques. Kathryn Hunter-Dyer, who owns KLH Medical Transcription Service in Fountain Valley, has cut back from daily deliveries to twice a week. “And I try to make those deliveries in the early morning hours to avoid stop-and-go traffic, which really saves on gas,” she said. “I have also been stocking the house with a circular trip to Sams Club, (Costco) and grocery store so that I only have to visit these stores every month or three.”
Ann Crane, owner of Meyerhof’s Fine Catering in Irvine, not only combines several deliveries in one trip, when possible, “we keep the (vehicles) serviced and running as efficiently as possible…I’ll replace tires to increase life on the vehicles. I haven’t had to turn down work (because of distance), but I have had to increase delivery fees on a case-by-case basis.”
Armando Guerra, chief executive at the Guerra Companies Inc. in Anaheim, said vehicle maintenance and service rerouting are part of his gas-saving strategy too. The electrical contractor also tracks employees’ fueling costs; schedules four-day, 10-hour shifts to keep service vehicles at a location longer; and asks customers to cooperate in timing their service calls. “And I tell them why!” Guerra stressed. “Our emphasis is on efficiencies…without sacrificing great customer service.”