Gas prices continue to soar, hurting businesses

As gas prices increased by another 3.1 cents per litre on Thursday, marking a new record high, small business owners across the province worry about the impact of the spike.

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

The maximum price of regular gas increased by another 3.1 cents across Newfoundland and Labrador on Thursday. (Kevin Yarr/CBC)

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 being hit hard.

Justin Hearn is a chartered accountant in Joe Batt's Arm, where the maximum price of gas rose to $1.716 per litre 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 2.2 cents per litre, furnace oil by 1.54 cents per litre and stove oil by 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 two cents per litre.

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

Hearn, who helps owners of small rural businesses make operational decisions, said fuel pricing tends to be a "big, big role" in that.

"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, co-owner of OnTime Courier Services 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, and in western Newfoundland.

Pike says he has been able to delay price increases, but 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 for gas for its eight vehicles.

Delbert Pike says trucking companies and airlines are going to charge 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, which offers daily return trips to St. John's — a service that costs him more than $200 in gas a day.

"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 five dollars, to an average fare of $55, but on some days that doesn't offset the cost of fuel, so he's considering 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 also hopes his company will continue to grow despite rising gas prices. Layoffs are a worst-case scenario for his courier service, which employs eight people.

Hearn is a bit more concerned.

Recently, he said, he has had more conversations with businesses abouut 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."

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Henrike Wilhelm


Henrike Wilhelm is a journalist working with CBC's bureau in St. John's.