Gas prices continue to soar, hurting businesses

Small business owners feel the weight of higher fuel prices – not just at the pump

As the maximum price of regular gas increased by another 3.1 cents across Newfoundland and Labrador on Thursday — a new record high for the province — one Fogo Island accountant says small business owners, especially in rural areas, are hard-hit.

Justin Hearn is a chartered accountant in Joe Batt’s Arm where the gas price rose to $1.716 on Thursday.

“We’re definitely impacted a little bit more in remote areas,” said Hearn.

As part of the Public Utilities Board weekly price-setting, the maximum price of gas increased to $1.643 a litre on the Avalon Peninsula, $1.668 in central Newfoundland, $1.65 in the Corner Brook region and $1.661 to $1.681 on the Northern Peninsula.

In Labrador, the maximum price is now $1.734 in Churchill Falls, $1.709 in western Labrador, $1.508 in central Labrador and $1.673 in southern Labrador.

Most other types of fuel went up as well.

Diesel fuel rose by up to 2.2 cents per litre, furnace oil by 1.54 cents per litre and stove oil by up to 1.99 cents per litre.

Furnace oil is now $1.06 on the northeast Avalon, $1.09 on the northwest Avalon, $1.10 in central Newfoundland, $1.07 in Corner Brook and surrounding areas and $1.13 on the northern peninsula from Englee to St. Anthony.

Only those relying on propane heating fuel can call themselves lucky as the price went down by 2 cents per litre.

Diesel fuel rose by up to 2.2 cents per litre, furnace oil by 1.54 cents per litre and stove oil by up to 1.99 cents per litre. (Chris Wattie/Reuters)

Hearn helps owners of small rural businesses make operational decisions.

“Fuel pricing tends to be a big, big role in that,” said Hearn.

“When local companies especially have already paper-thin margins, really you have to make a decision whether you’re going to have to pass the cost along to the customer or try to eat that cost.”

Cost of business

One rural business owner who has to consider price adjustments is Delbert Pike.

Pike is co-owner of OnTime Courier Services which is based in L’Anse-au-Loup in southeastern Labrador.

The company offers courier services from Labrador City in western Labrador all the way down to the Strait of Belle Isle and into Quebec, but also in western Newfoundland.

Pike says he has been able to delay price increases, but that a 20-to-25-per cent hike in fuel costs might force him to do just that very soon.

“A lot of trucking companies or airlines … they’re going to be charging more. So therefore, our costs are going to increase that much more again,” said Pike.

“It’s going to affect the bottom line on people’s freight.”

Right now, OnTime Courier pays around $3,000 to $5,000 every month just to cover gas for its eight vehicles.

Delbert Pike believes trucking companies and airlines are going to be charging more. (Guy Leblanc/CBC)

A business owner on Newfoundland’s south coast can relate to Pike.

James Hollett is the owner of Da Boot Bussing on the Burin Peninsula and offers daily return trips to St. John’s — a service that currently costs him more than $200 in gas daily.

“It’s frustrating,” said Hollett.

“We have to eventually pass the cost on to our passengers because there’s just, there’s no other way we could continue to operate. We rely … probably at least 90 per cent on passengers.

“Their fares are what covers the operating expense.”

Hollett already had to increase the fare by $5, to an average fare of $55, but on some days that doesn’t offset the cost of fuel, and so he might consider another round of fare increases.

While he tries to stay optimistic, he says he might soon have to trade one of his two bigger buses with a gas engine for one with a diesel engine.

In Labrador, Pike is also hopeful that his company will continue to grow despite rising gas prices. Layoffs are a worst-case scenario for his courier service that employs eight people.

Hearn is a bit more concerned.

Recently, he said, he has had more conversations with businesses regarding how to offset higher gas prices.

“I do worry that the ability to continue will also mean that … more businesses will have to cut labour.”