The “Ins and outs” of the Fuel Surcharge
The “Ins and outs” of the Fuel Surcharge
What is it?
A fuel surcharge is a flat percentage added onto a monthly invoice to attempt to offset the rising costs of the fuel necessary to deliver services. This surcharge is initiated when fuel costs per gallon rise to a predetermined ‘trigger’ cost per gallon. At BSS this surcharge is a flat 5% of a property’s invoice total per month.
Why is it utilized?
At BSS we provide services regardless of the onset of higher prices, rampant inflation, wage increases, equipment maintenance increases, etc. Every service we perform requires the utilization of fuel in the effort to effectively perform and complete these services. This surcharge offsets the increased cost of the delivery of services and ensures that BSS can deliver both the quality and quantity of services and attempt to remain cost effective.
When is it initiated?
At BSS, we institute this surcharge when the combined fuel cost average reaches $4.00 per gallon or more for more than one calendar month. The flip side of this is that when fuel costs dip below $4.00 per gallon for more than one calendar month this surcharge is retired. It is important to note that all of BSS’ equipment that uses gas requires premium ‘non-ethanol’ gas.*
What source(s) do we utilize to determine Fuel Costs per gallon?
At BSS we use the US Energy Information Administration’s figures (link below) to determine the fuel averages in our area. We rely on a source like this because the local gas station prices can vary significantly day to day and these do not provide a running monthly average that is needed to effectively evaluate the threshold of this surcharge. The fuel surcharge has existed on all of our contracts since we began as a service company back in 2007. This year (2022) is the first time that we have had to institute the surcharge and we look forward to when prices will fall below the threshold for a calendar month and it is no longer warranted.
Here are the historical charts for gas and diesel in our region:
Gas Chart
Diesel Chart
Here are the Rates at the time of this Post: (taken from the EIA website for Nov 2022)
Gas/Gallon: $3.774 (this represents an average cost per gallon of all gas grades – *BSS utilizes Premium grade only)
Diesel/Gallon: $5.392
Average/Gallon: $4.583
How is the Fuel Surcharge calculated?
All service item costs are totaled and an additional 5% is then added to the total cost. For example: In a month that qualifies for the surcharge, if the invoice amount for your property within that month was $125. Here is how things would pencil out:
Invoice Amount: $125
Fuel Surcharge: $125 (Invoice Amount) X 5% (Fuel Surcharge) = $6.25
Total Invoice Amount: $125 (Invoice Amount) + $6.25 (Fuel Surcharge) = $131.25 (New Invoice Amount)
At BSS, we have appreciated the response we have received from our clients who understand the unprecedented cost increases we have all experienced in the present economic climate. We look forward to a time again when things level out and we can return to business as usual.
Thank you for taking the time to understand the BSS Fuel Surcharge!
For more information on all the services that BSS performs please CLICK HERE.
To view the current information from the EIA Website, please CLICK HERE.
*BSS uses ‘non-ethanol’ gas in all of its equipment. Gas which contains ethanol is significantly more damaging to small engines than ethanol free gas. It has been documented that gas containing ethanol “caused hotter operating temperatures, erratic running, and engine-part failure in small engines.” To address this concern BSS utilizes ethanol free gasoline, only available in premium grades, to avoid the destructive effects of ethanol. Premium grade gas tends to be significantly more expensive than regular grade gas.
For more on the effects of Ethanol on small engines please read this article in Consumer Reports.
