ANNAPOLIS – With gas prices nearing an all-time high in Maryland, budgeting for fuel costs is becoming a major concern for those with vehicle fleets.
The average gas price in Maryland was $2.01 per gallon Monday, according to Amanda Knittle, AAA Mid-Atlantic spokeswoman. And, while it’s par with the national average, that number is approaching the highest recorded price in Maryland of $2.05, recorded June 3.
Businesses and governments that consume large quantities of fuel daily are devising strategies for how to offset the costs. Pepco Holdings Inc., corporate parent for Pepco and Connectiv Energy, has looked into transferring funds from overbudgeted departments, while the Maryland State Police has restricted use of off-duty vehicles. Some other options include using alternative fuels or negotiating contracts with fuel companies.
And, although companies do not plan to raise rates or limit services, consumers will feel the impact because everything people buy has a transportation cost attached to it, said Lon Anderson, AAA Mid-Atlantic director of public and government relations.
Just like airlines have a fuel surcharge on tickets, consumers may be forced to pay similar fees for other services, said Anderson.
“Increased gas prices don’t stop (at the pump),” said Anderson. “They cause increases in everything that we buy or services that we get.”
With 2,300 vehicles in its fleet, Pepco Holdings is looking for ways to offset fuel costs without charging customers, said spokesman Bob Dobkin.
Because rates are frozen there are few ways to offset higher fuel prices. This year has not been a bad storm season, so there may be some overbudgeting elsewhere that can be moved to the operation and maintenance budget, said Dobkin.
“We have to plan the best we can — this isn’t the first time,” said Dobkin. “We learn how to adjust and make do.”
One thing the holding company will not do is sacrifice customer service.
“We’ve got to keep our fleet running,” said Dobkin. “Our vehicles are on the road because they need to be.”
Verizon is not willing to trim services, either, said spokeswoman Sandra Arnette.
“That’s our job, to make sure people have working phones,” said Arnette. “That’s something we’ll continue to do, despite gas prices going up.”
The prices have spurred Verizon to look into alternative fuels, she said.
Baltimore Gas and Electric is also keeping an eye on prices as it vows to maintain top service.
BGE has 1,100 road vehicles and approximately 400 pieces of construction equipment using gasoline or diesel fuel. From October 2003 to this month, the company has seen costs increase 50 percent for diesel and 30 percent for gas, said spokeswoman Linda Foy.
Today’s situation is not as bad for the Maryland State Police as circumstances were in the 1970’s, said Sgt. Rob Moroney. Then, troopers had to patrol in parked cars for an hour a day to conserve fuel.
“We’re not at a crucial point where we need to take drastic action, but certainly there will be no reduction in services at all,” said Moroney.
The State Police may be in a better situation than others with large fleets because it instituted conservation measures before prices escalated. Troopers were asked to voluntarily save fuel on off-duty use in September. Those efforts resulted in savings of more than 10,000 gallons, said Moroney.
Pepco Holdings also took a proactive approach, negotiating contracts with fuel companies. Being high-volume buyers, energy companies get a break on gas prices, but the price does fluctuate some. On average, Pepco uses 32,000 gallons of gas and 24,500 gallons of diesel monthly, said Dobkin.
Connectiv used to have long-term, fixed-price fuel contracts, but it risked losing money when prices went down, said Dobkin.
BGE, too, may save slightly by purchasing its fuel in large quantities, said Foy.
The gas price hikes this time of year are somewhat unexpected.
Crude oil prices, which account for more than half of the cost of gasoline, have been very high in the past month, Knittle said. Hurricanes that hit the Gulf of Mexico caused crude oil production to decline by about half a million barrels a day, she said. That, along with uncertainty in the Middle East and high demand also pushed prices up.