Pumping up the fuel prices.

Byline: Joe Mosley The Register-Guard

So you're shaking your head over soaring gasoline prices that have taken the cost of a tankful perilously close to $40 for your car, or well more than $50 for your SUV.

Put yourself in Terry Leavitt's shoes.

His Springfield company, Leavitt's Freight Service, runs 85 long-haul freight trucks. The trucks' weekly on-road fuel bills have gone from $45,000 five weeks ago to $65,000 last week, for the same amount of fuel.

Like most trucking companies, Leavitt's has adopted an adjustable fuel surcharge that is passed on to its shipping customers. But with such rapid increases in fuel prices, even a two- to four-week delay between billing customers and receiving payment has taken on a short-term sting.

`That $20,000 (price difference) last week, we had to pull that right out of the bank - right out of cash,' Leavitt said Friday.

International oil prices reached a record of more than $66 per barrel on Friday, largely because of production shortages and refinery issues. That has translated into near-record gasoline and diesel fuel prices, with no immediate relief in sight.

The impact varies from industry to industry, but it's clear that the prices are bringing pain to just about any business that relies on motor vehicles to deliver its goods or services.

And while consumers may not be hurting just yet, it could be only a matter of time.

"Most of what we buy in the store is transported there by trucks, and if it's not a truck it's a train that also uses diesel," Portland economist Bill Conerly said.

"There's no doubt the cost of fuel is feeding through the rest of the economy. What's surprising is that it's not feeding through at a faster rate - the rate of inflation is still pretty low."

Eugene-Springfield companies from florists to septic tank pumpers are struggling with the question of whether - or when - to adopt their own fuel surcharges, or otherwise adjust their fees to account for higher gas prices.

For other companies, in lines of work so competitive that rate increases are out of the question, the trick becomes maintaining profitability when the bottom line is taking a hit from fuel prices.

`(Fuel costs) have definitely become a bigger number in our budget,' said Brian Bales, vice president of Royal Refuse, which does commercial and residential garbage hauling.

"It used to be that health insurance cost more than our fuel bill. Now the fuel bill is larger."

The company's business in Eugene is regulated by the city, which sets garbage-hauling fees for licensed franchisees.

Garbage-hauling companies theoretically can adjust their fees within a 10 percent range, "but with business being competitive in Eugene, I don't see anyone jumping at that one," Bales said.

His total of five commercial and residential garbage-hauling trucks each use anywhere from 30 to 50 gallons of fuel per day.

Gas prices in the Eugene-Springfield area reached an average of $2.58 per gallon for regular unleaded on Friday, according to AAA Oregon/Idaho. Premium unleaded at local stations averaged $2.76 per gallon, and diesel was $2.78.

`If prices stay at this level, we will see more people passing along (cost) increases to consumers,' said Conerly, the Portland economist, who expects fuel prices to key a rise in inflation to about a 3 percent annual rate.

"I think the pass-through to consumers we've seen so far is less than logical," Conerly said. "There are a number of companies that could be passing their cost increases on today, but they have actually gotten out of the habit."

That's the case at Ace Pumping, a Eugene septic tank pumping and maintenance company.

Like most of its competitors, Ace doesn't currently charge a mileage fee to serve outlying customers. But co-owner Mike Kuenne said some form of fee is being considered, after fuel costs topped out last month at $400 more than the same month two years earlier.

"It's something we're taking notice of," Kuenne said. `We're thinking about putting on a surcharge - not trying to make a profit on (fuel expenditures), but just to cushion it.'

Kirkland Flowers in Springfield already adjusted its delivery fee in April to account for added costs. Now, there's talk of another adjustment.

`Our local (Springfield) deliveries aren't so bad for us yet,' said Leah Payne, a longtime employee. "It's when we have to go into Eugene. We go up to Leaburg, even, and that can be very expensive for us."

Leavitt, the freight company owner, said that his industry may actually be better situated than most to deal with fuel cost increases.

A combination of rising fuel costs and insurance issues led to a big shakeout in the industry about six years ago, with several trucking firms filing for bankruptcy and going out of business, Leavitt said.

The companies that survived almost uniformly adopted fuel surcharges to insulate themselves from similar fuel price hikes in the future. Then, as the economy improved in the past couple of years, demand for trucking services has steadily increased.

"We're overbooked all the time," Leavitt said.

"It's a seller's market, if you will. So I'm more able to pass those increased costs on."