Dorsey Tire’s Fuel Price Stress Started Before the War

March 18, 2022

Fuel prices are in the headlines now, but Dorsey Tire Co. Inc. was tracking incredible increases well before Russia waged war in Ukraine. In January, the tire dealership’s year-over-year fuel costs had increased 70%.

Bruce Chamblee, chief operating officer at Dorsey Tire, says the February fuel bill was even more startling — 72% higher than February 2021.

“We know the fuel is consistently increasing but haven’t received a bill for this month’s use yet,” he says.

The commercial tire dealership, which has locations in Georgia and South Carolina, maintains a fleet of 73 vehicles, including 42 service trucks. The rest of the fleet is a mix of delivery and sales vehicles.

One of the tools Chamblee uses to monitor prices is a weekly report from the U.S. Energy Information Administration. It’s not meant to provide a forecast, however, which Chamblee acknowledges would be difficult due to the volatility and uncertainty of the war.

Chamblee says before the war, the dealership raised service rates to try to recover some of the increases in fuel prices, as well as “labor, maintenance and operating costs due to the pandemic.

“Unfortunately, we did these calculations based on fuel costs at that time, which was averaging $3.50 a gallon.”

So now the tire dealer is planning to tack on a fuel surcharge — and “will adjust as these costs continue to change. This surcharge will be on all services and deliveries we make.”

Chamblee says some of its vendors have announced fuel surcharges, “but not everyone has begun billing this. I would expect to see it more often in the weeks (and) months to come.”

He says tiremakers so far haven’t served notice of any fuel surcharges.

Dealers Respond to Spiking Fuel Prices

Crude oil prices to remain high

Oil prices crossed the $100-per-barrel level on Feb. 24 when Russia invaded Ukraine, and the Energy department says it expects crude oil prices of more than $100 per barrel to continue in the months to come.

“The sharp rise in crude oil prices reflects increased geopolitical risk and uncertainty regarding how announced and potential future sanctions may affect global energy markets,” the department said on March 16.

The higher forecast for crude oil increased the government’s forecast of retail gasoline prices.

“We expect gasoline in the United States to average $4/gallon this month and to continue rising to a forecast high of $4.12/gallon in May before gradually falling through the rest of the year.”

The department is forecasting the average regular retail gasoline price will be $3.79 in the U.S. in 2022 — which would be the highest average since 2014, after adjusting for inflation.

About the Author

Joy Kopcha | Managing Editor

After more than a dozen years working as a newspaper reporter in Kansas, Indiana, and Pennsylvania, Joy Kopcha joined Modern Tire Dealer as senior editor in 2014. She has covered murder trials, a prison riot and more city council, county commission, and school board meetings than she cares to remember.