Sudbury's record-breaking $1.60/L for fuel makes operating fleet businesses challenging

The cost of fuel hit an all time high in Greater Sudbury last week when it climbed to $1.60 per litre.

The added expense makes it difficult for businesses that rely on fuel for their operations, especially if they're trying to make a profit.

Aaron Taxi operates a fleet of 59 taxis.Owner Michael Sanders saidhe's spending about $4,000 more in weekly fuel costs alone due to the price at the pumps.

"It's pretty much eliminated any chance of a profit," he said. "It's challenging to swallow the constant increase in prices."

Cab fares are set by the city so raising rates is not an option.

"There are only so many avenues that we can really take," he said.

"Obviously we're not going to be cutting labour rates, we can't cut gas rates. We can increase the amount we charge, but that probably wouldn't be met with a lot of enthusiasm from our customers.

Sanders has incorporated 16 hybrid vehicles into his fleet which has helped with some fuel costs. He said he is considering adding electric vehicles, but at this point that cost is too much for the business.

"It is a rock and a hard place situation. Pretty much all we can do is find those efficiencies and they're small, incremental-type solutions to a gigantic problem," he said.

'Etching away at profit'

It's the same difficult situation at Lockerby Taxi, where there is a fleet of 40 taxis, all gas-powered..

Co-CEO Sharon Flinn says the fuel for those vehicles costs the business about $!,000 a day. The business uses an average of 700 litres of gas a day or 3,800 litres a week.

"Obviously fuel is one of our expenses in our bottom lines here, so it keeps on etching away at what kind of a profit we're trying to make," she said.

"We don't want to increase our fares. So it just makes it very difficult to make some money at this ballgame," she added.

Lockerby Taxi does have a gas tank on the premises and buys its fuel from a supplier at wholesale prices.

"That saves us a few pennies, but nothing drastic," Flinn said.

She also said that when drivers have out-of-town trips to communities where gasoline is less expensive, they're instructed to fuel up there.

Rideshare drivers impacted

For the ride-sharing company Uride, higher gas prices directly affect drivers, as they use their own vehicles.

"The priority right now is just coming up with a game plan to support drivers throughout this period when gas prices are high and then hopefully for everyone's sake they drop back down," said founder and CEO Cody Roberto, adding that management is considering adding a gas fee to the rates.

Out of every fare, drivers are provided a commission from Uride, but they must pay for their own fuel in their vehicles.

Roberto said the possible gas fee is still being discussed, but if approved it would be added on top of the fare rate and then provided to drivers.

He said he is fearful that if the company doesn't do something to address the high cost of gas for drivers that they could lose employees..

Greater Sudbury finding savings on fuel for fleet

The City of Greater Sudbury has 600 vehicles and equipment in its fleet, 380 are gas powered.

The director of assets and fleet, Shawn Turner, said the city pays the wholesale rate for regular fuel as a result of its volume discount. Plus it doesn't pay the full HST portion of the tax because it's a municipality. Municipalities only pay 2 per cent of the HST.

But they still monitor expenditures when it comes to fuel. Fuel makes up one-third of the cost of the fleet budget for overall maintenance.

Turner explained that there are a few mechanisms in place to help keep costs down.

"We can run reports daily to see where we've been spending fuel and if there are any concerns and if we need to monitor that, operating departments can manage that a little more closely," he said.

There is also a driver trainer at the city whose role is to make sure personnel are driving municipal vehicles in a safe and effective manner.

"So that again ultimately results in fuel savings."

Greater Sudbury also has five electric vehicles within its fleet, and Turner said they are in the process of ordering three more. He added that it's too early to determine if they have made a dent in the fuel budget for the city.

Why aregas prices so high in Sudbury?

According to Dan McTeague, president of Canadians for Affordable Energy, the price per litre of gasoline is a math formula calculated using the wholesale (or rack) price and adding in various taxes (federal, provincial and carbon). The difference between wholesale and retail is the profit that fuel retailers take for themselves.

"It tells me that gas stations are getting a little fatter retail margin. Normally they're content with six or seven cents a litre where they need to just cover their bases, but now they're about 14 or 15," he said.

McTeague follows gas prices across Canada and says the $1.60 recorded last week is a record for Greater Sudbury, but it wasn't quite the highest in the country last week.

"So you would have to start with Vancouver at $1.70, Victoria at $1.65, followed by St John's, Newfoundland which is $1.63 right and then you would come to Sudbury," he said.

As for why Sudbury always seems to have high gas prices, McTeague thinks it could have to do with the closed market during the winter months, and a lack of competition.

"There really isn't a lot of competition within the city of Sudbury itself. We do see for example in many other cities across Canada big box retail stores like Costco not only have their warehouse but they also then include gas stations."

McTeague said the new Costco pumps coming to Sudbury this summer will help reduce gas prices elsewhere in the city.

"Look for relief for the motorists when that happens."