Firms being driven round the bend by soaring fuel prices

With oil prices at record levels, it's not only motorists who are suffering. Mark McLaughlin examines the effect rapidly-rising pump prices are having on local businesses.

WHILE many drivers can either absorb the cost or leave their cars at home, many fuel-dependent businesses are fighting for survival. Last week, a convoy of hauliers took to the streets of London to protest at a further proposed 2p hike in fuel duty.

The protests might not yet be on the scale of those witnessed at Grangemouth and elsewhere at the turn of the century, but the mood is getting uglier as businesses find themselves being squeezed ever tighter.

Road hauliers and other fuel-dependent businesses, such as bus companies, taxis and driving schools, are feeling the pinch more than most.

The Road Hauliers Association (RHA) say local hauliers have seen their overheads increase substantially with the fuel bills now making up over 40 per cent of their total outlay – up from around 30 per cent just six months ago.

With details of company turnovers commercially sensitive, most local hauliers have been reluctant to talk about their bills. But one Restalrig-based company says its May fuel bill was £18,000 more expensive than in May 2007.

A second haulier, Neil Williams Haulage in Dalkeith, is facing similar bills and is struggling to make ends meet. Partner Craig Williams said: "We have to try to pass that cost on to the customer while still staying competitive, but the top line is fast approaching the bottom line.

"In truth, I think the Government could afford to let the tax go a bit. They're as much to blame as the oil companies for the high prices. It's the variation in prices that's hit us most. When we take on a contract, the cost is agreed, but some contracts were agreed on last year's fuel prices and we can't pass that on." RHA Scottish director Phil Flanders, based in Midlothian, said: "Some hauliers can clock up two round trips to London a week. As of this month, the cost of filling a 44-tonne diesel truck was sitting at around £600 a tank – up from £400 in January 2007.

"Ninety-two per cent of haulage companies operate with less than ten vehicles, but some of the larger companies could be facing massive fuel bill rises."

At current prices, the annual fuel bill for two round trips to London a week would be around £100,000 per vehicle a year.

Bus companies are also being badly hit. Edinburgh Coach Lines Ltd, which operates throughout Europe from its base on Salamander Street, faced a fuel bill of £37,500 last month. The bill was over £7000 higher than May 2007 and prices are continuing to rise.

Managing director Peter Fyvie said: "We're having to absorb most of this cost ourselves. We used to offer discounts and special offers but we just can't afford it now. Our 49-seaters are only getting about ten miles to the gallon, sometimes even less through cities. Edinburgh's roadworks are costing us dearly."

One company which is on the road round the clock is Lothian Buses. Chief executive Neil Renilson said fuel now accounted for 26 per cent of the firm's turnover – up from 15 per cent last year.

He said: "We recently increased the adult ticket price by 10p, which will generate a further £2.9 million this year. About £1.8 million of this will go towards covering the cost of the Government's cuts in concessionary travel, leaving £1.1m for 'general inflationary costs'."

Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, said Scottish bus companies faced a singular challenge because of the Scottish Government's decision not to pass on a £7.5m fuel rebate awarded by the treasury. The Government has countered that it spends a "considerable" £260m on buses already, but the chamber has also accused the SNP in the council of short-changing cabbies.

Mr Hewitt said: "We would like to see an emergency meeting of the transport committee to review taxi fares immediately because these guys are in dire straits." But councillor Colin Keir, convener of the regulatory committee, said while he was "sympathetic" to drivers' needs, a fare review was not due to take place until mid-2009.

Edinburgh taxi driver Stephen Hay, 40, from East Calder, is paying between £250 and £300 more a month for his fuel than this time last year, which amounts to around £3000 of his annual wage.

He said: "I'm having to work an extra hour and half a night to equal what I was taking last year.

On a Friday night, I usually do a 12-hour shift. In May 2007 my fuel bill was about £22 but last Friday I spent £40."

Driving instructor Billy Budgen, managing director of Driving Training Centre on Great Junction Street, is currently around £1200 a year worse off as a result of the price rises.

He said: "Most of our cars are diesel and last year we were able to fill a tank for £40, but now that will barely get us 40 litres.

"It now costs instructors around £50 to fill a tank, and during an average 40-hour week that instructor will have to put two-and-a-half tanks of petrol in his car.

"At £20 a lesson, an instructor earns just under £20,000 a year before tax, but if the fuel bills continue to rise we could face a shortage of instructors, as many decide it's not worth it."