Gas Is Cheaper, but They Still Charge Extra

by Stacey L. Bradford (Author Archive)

When oil prices started skyrocketing, consumers didn't just feel it at the gas pump. They felt it at the airport, the florist and even when they got their kitchen sink fixed, as businesses across a number of industries tacked on fuel surcharges. Now, since the price of crude oil has fallen more than 50% from its high last July, it’s only natural to assume those surcharges are on the way out, right?

Wrong. Yes, some businesses, such as New York-based grocery delivery service FreshDirect, have axed the extra fees. But plenty of others aren't cutting consumers much slack. Their argument: Oil prices are still cutting into their profits. For consumers, it's a tough argument to swallow. After all, they've seen prices at the pump fall from as much as $4.06 a gallon in July to a current $2.65 per gallon.

"As we feared, now that the price of gas and oil has gone down, we are not seeing the removal of the a la carte surcharges, which is an indicator of the fact that companies were using them as a way to raise prices," says Jack Gillis, director of public affairs for the Consumer Federation of America, a consumer advocacy group.

Here are eight industries that aren't passing on the cheaper cost of fuel to you:

1. Airlines

American Airlines (AMR: 9.20, +0.94, +11.38%). United Airlines (UAUA: 13.18, +2.18, +19.81%). Northwest Airlines (NWS: 10.18, +1.08, +11.86%). In fact, pretty much all the major legacy carriers continue to tack on a surcharge of $20 to $170 on many domestic flights, says Tom Parsons, CEO of travel web site BestFares.com. (Flights in markets that compete directly with Southwest Airlines (LUV: 11.24, +0.40, +3.69%) typically don't carry a fuel surcharge since the low-cost carrier doesn't charge the fee.) And so far, none of them have announced plans to lift these fees. Overseas, Lufthansa and British Airways are discounting the fee on some routes, forcing a few U.S. airlines -- including United and Northwest -- to decrease surcharges on certain international flights.

2. Cruise Lines

Cruising the high seas will cost you. Most of the major cruise lines, including Disney, Norwegian Cruise Line and Regent Seven Seas, still charge passengers a hefty fuel surcharge of between $7 and $11 a day, per person. (Third and fourth passengers in a room are sometimes charged less.) Two of the largest U.S.-based cruise operators, Carnival (CCL: 28.71, +0.31, +1.09%) and Royal Caribbean Cruises (RCL: 15.50, -0.64, -3.96%), will soon drop fuel surcharges for newly-booked 2010 cruises. (Carnival passengers, however, may not see much of a savings since the company is also boosting prices for 2010.)

3. Shipping Companies

The shipping companies won't be handing out any presents to customers this year. In November, Federal Express (FDX: 61.01, +2.93, +5.04%) and United Parcel Service (UPS: 51.13, +3.43, +7.19%) will tack on an 8.25% fuel surcharge for ground delivery and a whopping 28.5% for express service. The fuel surcharge is adjusted monthly based on the price of either diesel (for ground service) or jet fuel (for express service). (In October the ground shipping rate was 1% higher, and express service was actually 1.5% lower.) DHL hasn't announced November fuel fees yet, but it currently charges 9.3% on ground shipping and 29% on express packages.

4. Trash Management

Considering that diesel garbage trucks get just three or four miles per gallon, it's probably no surprise that waste management companies resorted to surcharges when fuel prices rocketed. They aren't planning to trash those fuel fees anytime soon. Larger companies, such as Waste Management (WMI: 31.44, +1.84, +6.21%) and Allied Waste Industries (AW: 10.19, +1.48, +16.99%). however, tie their fuel fees to the price of diesel -- so subscription customers should see some relief as prices fall.

5. Taxis

Taxi drivers in cities across the country, including Dallas, Las Vegas and Washington, D.C., charge an extra fuel fee of about a $1 to cart you around. (New York City is one of the few major American cities that prohibit taxi drivers from tacking on a fuel surcharge -- but the drivers are fighting for it.) Riders in Chicago may see the fee there disappear -- as long as gas prices remain below $2.70. Other cities may follow suit if prices continue to fall.

6. Water Delivery

Don't expect water delivery companies, including Nestle Waters North America (which owns Poland Springs, Deer Park and Arrowhead) and DS Waters of America (which owns Sparkletts and Kentwood Springs), to eliminate their fuel surcharges anytime soon. Nestle Waters, for example, is adjusting the fee downward as fuel costs drop, but won't abandon the charge altogether until the National U.S. Average On-Highway Diesel Fuel Price drops to $2 a gallon (from the current $3.28 a gallon). The last time prices were that low was back in January 2005.

7. Independent Contractors

Independent service contractors have also jumped on the fuel surcharge bandwagon. While some list the charge separately on invoices, others just incorporate it into their overall prices.

8. Flowers

Online florist ProFlowers charges $1 to $2 for fuel, depending on the delivery location, the amount of time allocated for delivery and the weight of the package itself. Should fuel prices continue to drop, the company says it will eliminate the fee. Calyx Flowers charges a $1 fuel service fee.

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