Nearly every product and service is affected by increasing gas prices. In Santa Barbara, some services can pass on the rising costs to consumers, while others are forced to absorb the hit.
“We’re affected greatly by (the rising prices); we fill every rig at least once a day,” said Ryan Tully, administrative supervisor for Santa Barbara County American Medical Response.
Santa Barbara County AMR purchased Mercedes-Benz Sprinter ambulances that are 20 percent to 30 percent more fuel-efficient, but there was no one to maintain them in the county so AMR was forced to ship them away, Tully said.
“We were really disappointed; no one could service them,” he said.
AMR can limit its fuel consumption through motion-detector lighting and automated stoves in the station, but when it comes to operation of the vehicles, it is rather limited in its strategies, Tully said. The ambulances are parked in the most energy-efficient positions throughout the county and idling time is minimized, but ultimately, customer service needs to be upheld.
“It becomes one of the areas of red in our budget, when fuel or maintenance prices go there is little we can do,” Tully said. “We are at the mercy at whatever they charge to fuel. We can’t provide different levels of service, so it just cuts into our profits.”
AMR is forced to operate at a fixed base rate it can charge patients or its insurance companies, similar to trash service companies such as MarBorg Industries.
“When rates increase for us, we can’t offset some of those costs like UPS or airlines, who can charge a fuel surcharge they tack right onto your bill,” Tully said.
MarBorg has fixed prices that don’t fluctuate with variables such as fuel prices, but it did implement a natural gas fuel station in 2007, president Mario Borgatello said. The company also invested in solar energy six years ago, but when it comes to alternative energy, he said one must keep a long-term perspective.
“We’re moving that direction as fast as we possibly can, and we have recently built a $1 million fuel station with natural gas,” Borgatello said. “We can no longer be tied to the extent we are on foreign oil. We have an abundance of natural gas, which is a very clean fuel.”
Yet, like most companies, MarBorg is still dependent on fossil fuels when it comes to the parts in its trucks and the 95 percent diesel fuel they run on (5 percent is biodiesel).
“Businesses that can pass them on to consumers are going to pass them on,” Borgatello said. “I’m sure UPS and airlines are not going to eat the increasing costs of fuel; they are going to raise fares.”
The price of oil is about $100 a barrel, and Santa Barbara’s average price of unleaded gasoline per gallon is a little more than $4, according to GasBuddy.com. Air Canada, one of the nation’s largest carriers, reportedly said it is suspending unprofitable routes and cutting the frequency of others as well as adjusting fares and fuel surcharges.
“Obviously, this increase in fuel prices is going to hurt,” UCSB economics professor Peter Rupert said. “Companies with fixed rates will have to get relief somehow. Maybe Congress will jump in and absorb the 30 percent increase in cost, which could be (an organization’s) whole profit.”
Higher costs mean lower output and slower growth, Rupert said, but there could be a silver — or “green” — lining.
“I think we learned we have to do a better job thinking about alternative energy policies,” he said. “Cash for Clunkers was an attempt — not my favorite — to get high gas guzzlers off the road; that helped, and we will do something similar again. We will move alternative transport up the priority list as people will drive less and use more public transportation.”
As far as the effect on the Santa Barbara economy, it could go either way, Rupert said. Although the city might see fewer tourists, Santa Barbara residents might take fewer vacations and spend more money at home.
“In the short run, lots of companies don’t have any alternatives, but in the long run you can switch energy sources or delivery mechanisms,” Rupert said. “Usually short-term impacts of price increases are big, but over time they get smaller and smaller.”
Representatives from UPS were not available for comment.