About Us

Russell Reid / Mr. John Fuel Surcharge FAQs

Why do you assess a fuel surcharge?

This fuel surcharge was enacted in response to escalating diesel fuel costs which has a direct impact on our business.  Indirectly, petroleum products are used in manufacturing and distribution by our suppliers who have in turn raised their prices.

The fuel surcharge allows us to continue to operate without a permanent price increase.  We also adjust the amount up or down in response to the fluctuation in diesel fuel costs as published on the Department of Energy website at http://tonto.eia.doe.gov/oog/info/wohdp/diesel_detail_report_combined.asp.

Why not just raise your prices?

We chose not to raise our prices as many of our suppliers did in order to keep our services cost effective for our customers.  Like everyone, we were hoping the escalating fuel prices would be temporary. By enacting a modest diesel fuel surcharge, we can continue to operate without permanently raising our standard pricing. 
 
Since our fuel surcharge is adjusted monthly, this has a lower impact on our customers than a price increase.  The surcharge is based on the fluctuating price of diesel fuel as reported by the US National Average Diesel Fuel Index published on the Department of Energy website at http://tonto.eia.doe.gov/oog/info/wohdp/diesel_detail_report_combined.asp. 
 

How do you figure the surcharge amount?

Many freight and transportation companies are charging by the mile which can vary significantly from case to case.  We base our surcharge on the percentage change of the current month over the base diesel price of $1.50 per gallon.  The percentage is adjusted monthly based on the price of diesel fuel as reported by the US National Average Diesel Fuel Index published on the Department of Energy website at http://tonto.eia.doe.gov/oog/info/wohdp/diesel_detail_report_combined.asp.  This method has the least amount of impact on our customers.

Specifically, how are you affected by high diesel costs?

Diesel fuel to power our trucks is our single largest component of operating cost after direct labor and it is one which we cannot control. Unfortunately for us, the impact of these costs is compounded by the unique nature of our business.  Our newest, most technologically-advanced diesel engines realize about 7 miles per gallon while driving, but also need to burn diesel fuel while stationary to operate the vacuum pumps.  This means that much of the time our trucks get 0 miles per gallon.

Our suppliers have either raised their pricing or have assessed surcharges to recover the increased fuel costs.  In addition, the costs for items utilizing petroleum and resin have increased as well such as oil, lubricants, rubber components and truck parts. 

What are you doing to keep costs down?

Our Dispatch Department works to reduce the amount of trips via efficient routing. Arranging for services in the same areas on the same day cuts down on the amount of fuel we use on a daily basis.  While some customers do not like to wait for service, most understand that this tactic is necessary to control fuel costs and maintain our competitive rates.

We have recently invested in logistics software to optimize our routes to make them as efficient as possible.  This reduces the amount of trips as well as cuts down of distance travelled from our 7 locations.  This innovative technology also assists on a daily basis to help incorporate last minute changes or emergency services in to our current schedule in the most efficient manner possible.  
 
Our routes also take in to consideration the traffic patterns in our serving area.  Many of our Field Service Technicians work at night to avoid idling in traffic, especially for routes in more densely populated areas.

We maintain state of the art equipment and utilize a nearly all Peterbilt fleet.  Our newest vehicles feature engines by Paccar who recently earned the National Medal of Technology for developing aerodynamic, lightweight commercial vehicles which have dramatically reduced fuel consumption. 

In addition to optimizing our fleet operations, we continually review operating procedures across the board to make them more efficient.
 

Now that gas costs less, why are you still charging a surcharge?

While regular gasoline prices have come down, diesel fuel prices remain at high levels.  This is due in part to the declining demand for gasoline as opposed to diesel demand which remains strong worldwide as a result of its use in manufacturing and production.  As of September 08, gasoline demand is down almost 3%, while diesel demand is still positive. 

Other factors affecting diesel vs. gas costs include higher taxes on diesel fuels, less diesel import availability, and the introduction of ultra low sulfur diesel in 2006 which costs more to manufacture.   According to the American Petroleum Institute, "more than $8 billion in capital investments for the new equipment required to produce and distribute this clean diesel has added to production and distribution costs."

Since the surcharge is based on the cost of diesel fuel as published on the Department of Energy website, lower diesel fuel costs mean a lower surcharge amount.

When will the surcharge be removed?

We will remove the diesel fuel surcharge when the cost of diesel fuel falls to $1.50 per gallon.  This is the base rate used to calculate the surcharge.  At this point we will also be able to negotiate our rates with our suppliers to ensure lower costs across the board.