Gas Prices Down, But Fuel Surcharges Linger
It may cost much less to fill up our vehicles with gas these days, but we are still paying fuel surcharges to ship packages, travel by air and in some cases, take a cab or car service.
"People are properly inpatient for when some of these low oil prices are going to lower some of these freight charges," said Tom Kloza, global head of energy analysis with the Oil Price Information Service. "It particularly rears its head with diesel. If you look at diesel, prices have dropped 50, 60 and 70 cents, but the wholesale prices have dropped by about $1.50. So, all of the fleets that load up at truck stops pay the wholesale price, so they benefit from lower numbers. But, the way the government works it with fuel surcharges, they are tied to the very delayed and stubborn retail prices."
It will take some time to see the surcharges come down, according to Kloza.
"You've heard of jet lag, this is diesel lag and it'll take a while before the cost of sending everything from food to other merchandise drops and we get rid of these fuel surcharges that are tied to much higher numbers," he said.
Some surcharges are falling away and are beginning to move lower, but most freight surcharges are tied to the price of diesel and those retail prices will catch up to wholesale.
"It's a slow process. Wholesale prices have dropped rapidly, but retail prices for diesel have dropped at glacial-like speed and unfortunately, surcharges are tied to the latter," Kloza said.
When it comes to surcharges imposed by airlines, there are more questions than answers, according to Kloza.
"The price of jet fuel is about half of what the price was one year ago and yet, there is no evidence of any fare cuts, no evidence of additional seat room and there's no evidence of getting rid of any of those charges for bringing bags on for which they used the high oil prices as an excuse," he said.
Meanwhile, some consumer groups are calling on the airlines to slash fares and a formal letter has been sent to CEOs at 12 major US airlines.
"We have seen six months of steadily dropping gas costs," said Paul Hudson, president of FlyersRights.com, a 50,000-member airline passenger organization in a press release Monday. "By any measure, the money saved by the airlines should be reflected in lower airfares."
Airlines are the ones who clearly established the link between fuel and airfares, according to the release. For the past five years while fuel costs were going up, airlines were hiking fares and regularly releasing stories about the need for fuel surcharges, baggage fees and other fees.
"Because of the big airline mergers, competition has been squeezed out of the system," said Charlie Leocha, chairman of Travelers United (formerly Consumer Travel Alliance) in a press release Monday. "With only three network carriers, airlines now have the luxury of ignoring the market and maintaining high prices and low capacity. Enough is enough, passengers want to see the fuel cost saving being passed along to us."