BY JACOB PALMER | OB DIGITAL NEWS EDITOR
Consumers love the savings they get from low oil prices, but how has business been affected?
BY JACOB PALMER | OB DIGITAL NEWS EDITOR
The price of a barrel of oil continues to plummet: We asked companies how they have been affected by lower fuel costs.
Click through to see their responses.
Marie Dodds, director of government and public affairs:
We saw data that indicates a record amount of traveling over the holidays. A total of 98.6 million Americans — which is a record volume for the year-end holiday season. That’s been a huge increase over years past. As far as looking at spring break and summer travel — our travel was up last year — and anecdotally, people are more interested in summer and spring break travel. That has translated to bookings, and people are interested in going places and doing things. …
When gas decreases as much as it has, it’s at 5-and-a-half-to-six year lows, gas prices decreases are likened to a tax decrease because it’s money consumers have in their pockets. I can’t spend my 401K or IRA, but every dollar I don’t spend on gas I have in my wallet and I can spend that on different things. Ninety-four percent of people drove to their holiday destinations. We also saw increases in air traffic as well. Airfares were down 7 percent compared to 2013, but airfares have been slow to come down. Most folks plan airline in advance, and they’re not going to get a refund because gas prices went down. Airlines have talked about the economy hurting them so there is an attitude that they’re going to get it while the getting is good. Eventually, one or more airlines is going to lower prices and the others will follow suit. …
I’ve been tracking gas prices since 2007 and people have short memories — we’ve seen prices go up and down and people are quick to react. We’ve seen this movie a few times now. When gas is $4/gallon, people swear they will curtail their driving, but people forget quickly.
Darren Engle, director of governmental relations:
Everyone likes that gas prices are low right now, but ask businesses about their fuel expenses in a few months when gas prices are back up to historic levels. There’s a reason that more and more businesses are seeing the economic benefits of converting to cleaner, homegrown fuel options like propane. Even today, propane prices are more affordable than gasoline and diesel — and our fleet consumers can count on clean, affordable, American-made fuel without having to worry about completely unpredictable oil price spikes and fluctuations.
Diane Hames, general manager of marketing and strategy:
Daimler Trucks North America’s flagship vehicle, the Freightliner Cascadia Evolution, is pacing industry order intake for long-haul applications that demand the highest level of fuel efficiency. Regardless of fluctuations in fuel prices, our customers’ dedication to acquiring vehicles with a proven real cost of ownership solution has driven sales of the Freightliner Cascadia Evolution, as well as the expansion of Daimler Trucks North America’s entire product portfolio and we are very optimistic for continued growth expansion in 2015.
Bill Furman, CEO, in regards to Greenbrier’s third-quarter earnings statement:
The leading indicator for our business is the condition of the US economy, not energy prices. Macro-economic conditions indicate strength and expansion for the US economy in 2015 and beyond, with lower energy prices creating a strong impetus for auto production, consumer spending and overall growth. We are also making investments toward the future which includes our separate announcement today of an equity investment in Brazil-based Amsted-Maxion Hortolândia, the leading manufacturer of railcars in South America.
Mike Priestley, owner/operations manager:
Generally speaking I feel like low prices are beneficial to myself as well as to our 2,500 customers whom we service each year. I believe low oil prices will generally be beneficial to our overall economy, as well, regardless as to how the stock market is currently convulsing. I think that my bankers would probably prefer to see the large dollar volume continue from our company that has been customary these last several years. But we, as a company and my wife and I as individual owners, have fewer dollars at risk in handling each and every delivery we do for our treasured customers. Consumers, for their part, are more likely to fuel up with more gallons, since value is dramatically enhanced at these lower prices.
Fuel oil dealers and gasoline station operators have typically operated on a “cents per gallon” mark-up as opposed to a percentage mark-up therefor our actual margins are better and easier to keep in line with what financiers would prefer us to have when considering financing for us with “higher” margins even while we are handling fewer gross revenue dollars.