Fuel Fees Take On a New Form

When oil prices skyrocketed earlier this year, it certainly didn’t take long for companies across the country to slap fuel surcharges onto your bill. But when oil prices came back down to earth, many of these same businesses didn’t show that same expediency in removing the add-on fuel costs.

Eight weeks ago, we looked into this practice and found that, despite plummeting oil and gas prices, fuel surcharges remained on everything from airline tickets to water deliveries. (You can read our original story here.) Even independent contractors like plumbers jumped on the fuel surcharge bandwagon – charging customers an extra couple bucks per home visit.

Since our story ran in October, fuel prices have dropped even further. While many of the companies and industries that we spotlighted have since dropped their fuel surcharges, many consumers are still paying extra for fuel.

What gives? While the line for a “fuel surcharge” may be absent from your bill or ticket price, it doesn't mean the charge has disappeared altogether. Instead, many companies have rolled the fee — which, keep in mind, was supposed to be temporary — into their base prices, says Jack Gillis, director of public affairs for the Consumer Federation of America. He argues that the move is better for consumers since they will know the total price they'll pay upfront rather than get socked with a fee after the fact.

However, just because the old fuel surcharges have taken on a new form, or have disappeared altogether, doesn't mean new ones won't pop up if the price of oil starts heading skyward again. Last month OPEC announced that, in response to falling oil prices, it would cut the U.S.'s supply of oil starting in the new year. The move could boost prices at the pump — and again spark an onslaught of more fuel fees.

Below are seven industries that reluctantly dropped their fuel surcharges over the past couple of months. Whether or not they'll bring back the added fees in 2009 is anybody's guess.

All major legacy airlines – including American Airlines (AMR), United (UAUA) and Northwest – have dropped the fuel surcharge on domestic flights. But as the fees have disappeared, base fares have jumped, says Tom Parsons, CEO of travel web site BestFares.com. A ticket that cost $200 in August, plus a $50 fuel surcharge fee, might just be listed at $250 now, he says . Legacy carriers haven’t had a sale on fares in over a year, Parsons says, so if oil prices stay low, consumers can possibly look forward to decreased ticket prices in the spring.

In October, a number of the major cruise lines — including Disney (DIS), Norwegian (NCL) and Regent Seven Seas — were still charging an extra $7 to $11 a day per passenger in fuel surcharges. Since then, all three have suspended fuel surcharges and even say they will refund passengers who paid fuel surcharges on cruises booked for 2009.

DHL, FedEx (FDX) and UPS (UPS) charged customers an extra 28.5% to 36.5% in fuel surcharges on express deliveries at the height of the gas crunch. While those fees are down dramatically — both UPS and FedEx will charge a 7.5% fuel surcharge for express delivery in January — don’t expect those add-ons to ever disappear completely. The fuel surcharge is ever-present in the shipping industry and set to an index that’s adjusted monthly based on the price of diesel.

Like delivery companies, large waste-removal companies like Waste Management (WMI) and Allied Waste Industries (AW) tie their prices to the cost of diesel. As these prices have dropped – prices went from $4.76 a gallon in July to $2.32 in late December – so have the companies' surcharges, according to the indexes available on their web sites.

As gas prices dropped, taxi fuel surcharges across the U.S. have disappeared. Philadelphia ended its surcharge of 50 cents on Dec. 1, and Washington, D.C., ended its $1 surcharge on Dec. 4. Las Vegas and Chicago dropped their taxi add-ons in mid-November.

Water-delivery companies have long had a fuel surcharge built into their delivery costs. Nestle Waters (which owns Poland Spring, Deer Park and Arrowhead) has decreased the fare as the National U.S. Average On-Highway Diesel Fuel Price drops – but it won’t abandon the fee entirely until the price drops below $2 a gallon. That may be a long way off: Prices are currently between $2.24 and $2.64 across the states.

When gas prices were on the rise, independent contractors were feeling the pain. Many tacked on a fuel surcharge or rolled it into the overall cost of their service. Now gas prices have come down, but other costs of doing business have gone up, says Charlie Wallace, executive director for Quality Service Contractors. While an additional line on your bill for a fuel surcharge may have disappeared, you can expect to pay extra for the total cost of the service or for overhead, he says.