The ”Fuel Surcharge” Scam

The latest trick to hide corporate price hikes.

When higher costs squeeze them, most companies face two choices. They can raise their prices, risking the wrath of consumers and the loss of market share to cheaper competitors. Or they can sacrifice profits to keep prices steady and retain market share. But these days, some companies have found a third way: fuel surcharges.

At first blush, fuel surcharges seem like transparent, mathematically determined means for companies to recoup their expenses for the unexpectedly high price of gasoline. But as they spread into other industries, fuel surcharges more and more seem as if they’re just an au courant way of raising prices, while duping customers into thinking they’re not paying more.

The surcharges appear to have a reassuring precision. The companies lay out exactly how fuel surcharges are determined. UPS notes that its surcharge, based on an index of fuel prices, changes monthly and kicks in only when the price of “on-highway diesel” is more than $1.50. As of early August, the surcharge was 4.75 percent on ground packages and 16 percent on air and international deliveries. FedEx’s fuel surcharges, which kick in when diesel is $1.50 and jet fuel is 82 cents per gallon, are the same. DHL has fuel surcharges of 4.8 percent on ground service and 18 percent on air and international services. All rely on data provided by the Energy Information Agency, which shows that the price of gasoline, at $2.92 a gallon, is up 31 percent from a year ago, while diesel, at $3.03 a gallon, is up 44 percent from a year ago. It sounds pretty unobjectionable. UPS’s most recent results, which show the company struggling with higher energy prices, make it seem as if surcharges aren’t even recouping the higher costs.

But the more you delve into the fuel surcharges, the less sense they make. In theory, the basic price a delivery company charges covers operating costs