Putting the brakes on gas expenses
Steve Silva of Steve Silva Plumbing has cut fuel costs by having employees drive to work rather than using company vehicles. Now, all the trucks are kept at the business. Lianne Milton/Register |
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Even as prices fall, businesses get creative
By JENNIFER HUFFMAN
Register Business Writer
November 24th, 2009
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If you thought filling up your 15-gallon tank costs a lot, consider the plight of Steve Silva of Napa. His fleet of 22 trucks uses approximately 2,000 gallons of fuel a month.
“With the economy slowing down and high gas prices, it was a double whammy,” said the owner of Steve Silva Plumbing.
But as fuel prices have fallen as much as $1 a gallon in California over the past month, Silva said, “Now we have a little relief.”
While cheaper fuel costs are a welcome change, some businesses continue to watch expenses gallon by gallon. Unlike some service providers, Silva did not pass on the higher expenses to his customers.
“We basically absorbed the higher gas prices,” he said. “It affects our bottom line.”
The company tracks each truck and their gas station purchases, he said. And if you think Silva or many other small and medium-sized business have a line on their own gas supplies, you’re wrong.
“We go to the pump like everyone else,” said Silva. “There’s no discount for volume, that’s for sure.”
Silva said higher fuel prices caused him to reconsider aspects of his operations, such as the number of trucks he uses.
“We looked at the guys traveling the longer distances and made sure they were in more efficient trucks,” he said.
“We parked two or three of the gas guzzlers — those getting eight to 10 mpg. They were older utility trucks that carry a lot of weight.”
Silva also looked into buying smaller pickups, but he isn’t sure the gas savings would cover the expense of a new vehicle. For now, he’s holding off on any purchases.
Cutting costs
Other businesses are seeking creative ways to control fuel costs. Enterprise might be best known as a rental car company, but it is providing a different service to Ruben Perez of Napa Electric.
“We were spending a lot of money on older vehicles with bad gas mileage,” Perez said. Putting a $3,000 transmission into a van worth $2,000 didn’t make much sense.
After analyzing maintenance and fuel costs for his older trucks, the business decided to lease 15 new vans; from Enterprise.
“We have about 50 vehicles we’re trying 15 with Enterprise to see how it goes. So far it’s been great. They paint them, they outfit them and they take the old ones back.”
With more than 50 trucks to gas up and maintain, at the peak of fuel prices this summer, the company spent as much as $18,000 a month on gas.
The Enterprise program will result in savings of $25,000 a year in gas, maintenance and repair, predicts office manager Tiffany Kuehl.
Besides new vehicles, simple ideas also make a difference.
“We made the guys plan better,” said Perez, for example, avoiding last-minute deliveries.
Perez also asks suppliers to deliver directly to the job site, not to Napa Electric’s headquarters.
“We did a lot of restructuring just to cut down on the trips Upvalley,” he said.
Perez isn’t the only one keeping a close eye on gas bills. Gary Garaventa, at Garaventa’s Florist & Gifts, has three trucks and spends about $1,500 a month on gas, he said.
Garaventa hasn’t increased his delivery fees, but “we’re being more diligent about grouping our deliveries,” he said.
“We try and make one or two runs at a time instead of three to five. But it’s hard.”
The business delivers from St. Helena to American Canyon. “My trucks are gone all the time,” he said.
Garaventa said he welcomes the recent drop in gas prices, but said, “I don’t know if it’s enough to make a difference yet.”
“We’re trying to do the best we can for our customers and not have to charge and arm and a leg for a delivery.”
Garaventa and others may find more relief on the way as retail gasoline prices dipped for a 17th week since July 4, falling below $2 a gallon in a number of states and as low as $1.77 in Des Moines, Iowa.
Retail gasoline prices fell to a national average of $2.22 a gallon, dragged down by the falling price of crude oil, which now costs 60 percent less per barrel than it did in mid-July.
The average price has fallen nearly 32 percent, and nearly $1 a gallon statewide, in the past month and, according to AAA, could be headed to $2 a gallon nationally by year’s end.
Oil prices continued to slide, to near $55 a barrel Thursday before rebounding slightly, as bad economic news from the world’s largest economies heightened fears that a global downturn will slash demand for crude.
“As the global economy continues to weaken, we’re going to see further downward pressure on oil,” said Stephen Roach, chairman of Morgan Stanley Asia, in Singapore. “I think we’ll certainly challenge the $50 threshold. We could challenge the $40 threshold.”
The Associated Press contributed to this story.
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telebender wrote on Nov 15, 2008 7:03 AM:
Don't cry, Steve, when was the last time you twisted a wrench or got covered in sewage? "
upvalley wrote on Nov 15, 2008 8:57 AM:
mom2 wrote on Nov 15, 2008 9:28 AM:
The gas prices are making business owners think about the effect on their bottom line. I would hope that cutting back on trips and linking trips to make a difference in the gas bill for business makes a good impression on them. All of the cut backs mean less damage to the environment and a smarter way of doing business. Now just carry over to conserving energy at your office facility - cutting energy use and conserving helps the bottom line too. If we are smarter about how we operate then the pay off will be a positive bottom line.
And BTW, good for you telebender for operating one car. I have a few friends who have only one car they share to get to work and around town. Some other friends switched to motorcycles and others to bicycles. They switched to save money, but the benefit is that there are few less cars on the road and a few less emissions in the air. "
Newview wrote on Nov 15, 2008 9:40 AM:
Poking fun in hard times, I know Steve and he has worked hard, so have all of us. It is not the current time to point fingers. It is time for all of us to help each other and that includes the Register too. How about stories on the little guys who are working multiple jobs to keep their heads above the water line? "
winecountry0625 wrote on Nov 15, 2008 9:51 AM:
winghunter wrote on Nov 15, 2008 11:07 AM:
reason-ator wrote on Nov 15, 2008 11:10 AM:
krusty wrote on Nov 15, 2008 1:21 PM:
dizzy wrote on Nov 15, 2008 2:17 PM:
I've known Steve for years and know plenty of people in the construction industry as well that have worked with him over the years. He is a great guy who has worked very hard to get to where he is at today. He employees quite a few people and gives back to this community. Too begrudge him his success while whining about your own failures reeks of jealousy. "
mom2teens wrote on Nov 15, 2008 2:32 PM:
And, on another note, to all the businesses who have vehicles with their name on the side (an excellent form of advertising) - you need to think about how you drive - you will lose customers due to poor driving. It leaves a bad taste in people's mouths (just look at reason-ator's comment) "
iplum2 wrote on Nov 15, 2008 4:56 PM:
telebender wrote on Nov 15, 2008 5:12 PM:
jeeper16 wrote on Nov 15, 2008 5:18 PM:
vocal-de-local wrote on Nov 15, 2008 6:09 PM:
I suspect, however, that Silva pays his employees a living wage. Plumbers are usually well compensated. "
SouthNapa wrote on Nov 15, 2008 6:52 PM:
JMB wrote on Nov 15, 2008 11:38 PM:
CaliGirl wrote on Nov 15, 2008 11:45 PM:
It takes an exceptional business man to absorb the increase in transportation costs and not pass it on to his customers. Especially when a lot of us are in the same or worse position than you are, it's nice to know someone is aware of the financial strains a plumbing problem can cause to those on a budget.
I work for one of your supplies and I find you to be one of our nicest most professional customers. Also as a loyal Silva Plumbing customer I find your employees always helpful, friendly and efficient at their jobs......
All around a great person, company, an asset to the Napa business community.....
Thank you..... "
Newview wrote on Nov 16, 2008 10:40 AM:
I believe these comment postings are good for the Napa community to allow communication and work to shake off the problem of Napan's holding resentments and gossip against Napan's. Gee, man! It would seem that it never stops. Mark Twain said, "thar is gossip and then thar is the truth". He mean't that when your gossiping you best be talkin' the truth. "