Record Gas Prices Have Lawn Care Pros Scrambling

When do you expect gas prices to peak in the U.S.? What will it take to get gas prices under control?

I expect gas prices to peak before the end of 2022, but to continue to rise into the summer. The cause of the most recent spike seems to be the conflict in the Ukraine. If and when that conflict resolves, I expect the price to come back down.

What less obvious short- and long-term effects, if any, will higher gas prices have on the outdoor services industry?

Outdoor services will have a difficult choice to make this spring: raise their prices (to pass the cost of gas on to their customers) or take a hit out of their bottom line. I don’t see many long-term effects from this current spike.

How likely is this development to accelerate the lawn care industry’s transition to greener practices and equipment?

I don’t see electric tools as a long-term solution for the lawn care industry. Not unless the battery technology improves substantially. Otherwise, lawn servicers will have to buy twice the equipment so that half of it can be charging at any given time. It’s not feasible with the current technology, so I don’t see the current gas price spike as affecting that adoption decision.

What are three tips to cut fuel costs that you would offer to lawn care pros and everyone else feeling financial pain at the pump when filling up?

1. The obvious solution is to not consume as much fuel! 
2. For lawn servicers, that means going longer in between appointments to reduce total machine usage.
3. Always fill up at the same gas station chain to take advantage of any rewards programs for customer loyalty. 

When do you expect gas prices to peak in the U.S.? What will it take to get gas prices under control?

First, we’ve seen this story before. Oil prices peaked above $140/barrel in July 2008. At the time, many said that oil prices would hit $200/bbl and that this was the new normal. By December, they were at $33/bbl. Oil prices are set by the markets – not by individual companies or countries. When prices rise, new/additional production comes online. At the same time, demand starts falling as consumers respond to the higher prices. So here’s what we know and don’t know:

  *   Gas prices are likely to remain extremely volatile for the next few months, but will eventually come down as production ramps up worldwide as available suppliers as higher oil prices lead more producers to increase production and to invest in new sources. For example, Saudi Aramco recently announced they’d invest $50 billion this year on projects, including shale drilling.

  *   Whether or not prices have peaked is unknown, largely because no one knows what the outcome of the Russia/Ukraine conflict will be. It’s clear that companies and countries intend to stop purchasing Russian oil. This is what’s driving prices up for now. It’s possible we’ll see them go higher if the conflict continues or if Russia takes additional steps toward retaliating for all the sanctions. So in the short term, we will have considerable supply uncertainty, which drives up prices. Countries can and will continue to respond to short-term supply disruptions by releasing oil from our strategic oil reserves, which were set up in the ‘70s for exactly this reason – to cushion any future supply interruptions.

  *   We learned during the 2008 run-up in gas prices that once gasoline goes over $4/gallon in the U.S., consumers begin changing their habits to avoid sticker shock at the pump. In 2008, we saw a huge dropoff in truck sales and huge increases in hybrid car sales, such as the Prius. This time around, we will see a sharp increase in EV sales and orders, including the electric Ford F-150. Apparently, Ford has to stop taking orders because demand was so high. We’ll also see a very steep uptick in electric mowers and accessories, such as leaf blowers/grass trimmers.

What are three tips to cut fuel costs that you would offer to lawn care pros and everyone else feeling financial pain at the pump when filling up?

In general, though, there’s not a lot that the lawn care service industry can do in the short term to offset the higher prices, other than to pass it along to consumers. Sure, they can make sure they don’t leave their trucks/equipment idling, can keep their driving speeds below 60 mph (vehicles more efficient at 60 than 75), keep tires properly inflated, etc., but this isn’t going to make a huge difference. And yes, gas prices will come down, but forward-looking companies should understand that the future is electric vehicles and equipment. 

It’s likely many towns and states will start phasing out gasoline-powered lawn trimmers, mowers, etc., due to concerns about local air pollution and in general, a push to a lower-carbon future. Forward-looking companies should consider whether now is the time to make that switch. Consider the fact that Amazon has put in orders for 100,000 electric delivery vans – they are just one of many companies that see where things are going and want to be onboard sooner, rather than later. Companies should check out the availability of local, state, and federal incentives for purchasing electric vehicles or equipment as they might be surprised at how cost effective some of the options might be for them.

When do you expect gas prices to peak in the U.S.? What will it take to get gas prices under control?

I expect that gas prices may be near their peak now. Some of this depends on the ongoing war in Ukraine and the U.S. ban on oil imported from Russia. Gas prices will return to levels more like the recent past when the war ends. However, gas prices are often volatile. For example, just two years ago, most of us noticed lower-than-usual gas prices when the pandemic began. Finally, gas prices are not at their all-time peak if you consider the purchasing power required to buy it, that is, the inflation-adjusted price. By that measure, we have had higher gas prices, although you would need to go back more than five years to find them.

What less obvious short- and long-term effects, if any, will higher gas prices have on the outdoor services industry?

Higher gas prices tend to make people take fewer road trips and stay home more. It sometimes also prompts people to work from home more. This is likely to lead to more interest in landscaping and in yard improvement projects. It also is likely to lead to more people wanting to find local spots to enjoy the outdoors, such as hiking and walking trails or local outdoor recreational sites like lakes, rivers, beaches, and camping sites. 

The rise in gas prices is another nudge to consumers to find ways to use environmentally-friendly equipment and techniques. For those in the outdoor service industry, higher gas prices affect the everyday operations, such as the cost of fuel for equipment and for moving people and equipment, as well as encouraging a move toward processes that are less gas-dependent. Higher gas prices can also lead to an increased demand for lawn care services as people stay home.

How likely is this development to accelerate the lawn care industry’s transition to greener practices and equipment?

The rise in gas prices is a natural opportunity for the lawn care industry to promote a move to greener practices and equipment. If the rise in prices also affects homeowners’ interest in green practices, then the move could be substantial.

What are three tips to cut fuel costs that you would offer to lawn care pros and everyone else feeling financial pain at the pump when filling up?

My three basic tips are these: 1) avoid idling; 2) plan your jobs or trips to minimize driving; and 3) make sure you aren’t carrying excess items in your truck or car that might be adding to the vehicle weight.

When do you expect gas prices to peak in the U.S.? What will it take to get gas prices under control?

The price of gas is determined by a culmination of factors, on both the demand and supply sides of the market. In terms of supply, the reduction of imports of oil from Russia constitutes a negative shock to supply, which pushes prices higher. While higher prices for oil (which can be refined into gasoline) should elicit more domestic production, U.S. companies have struggled to immediately find the capital and labor necessary to produce and refine a higher quantity of a similar grade of oil domestically. 

Coupled with this supply shock, we have also seen an increase in demand for gasoline. We see a seasonal increase each summer as people hit the open road when temperatures rise and holidays are taken, but it may also be impacted this year by people resuming more of their normal pre-Covid activities. In the short-run, demand likely increased even more as everyone rushed to the pump to purchase gas before the price rose further, driving prices even higher.

While there may be a large increase in demand overall, higher prices will still deter some drivers from taking extra trips or joyriding through the country, so we should see a stabilization of gas prices reasonably soon.

What less obvious short- and long-term effects, if any, will higher gas prices have on the outdoor services industry?

While the direct effect of higher gas prices may be using less gas by running your lawn mower or leaf blower less frequently, in the long-term people may find that the cost of switching to electric or manually powered tools doesn’t seem so bad, as long as gas prices remain high.

How likely is this development to accelerate the lawn care industry’s transition to greener practices and equipment?

When considering the switch from gas-powered equipment to greener tools, the benefits must be weighed against the costs. The benefits of not needing gasoline are much higher when that gasoline is expensive, but there are also benefits from having quieter and lighter tools that are easier to handle and require less maintenance.

The costs of using greener practices and equipment can be felt in terms of having less powerful tools, for instance. As the demand rises for these types of tools, it will push manufacturers to invest in development equipment that lasts longer and competes more evenly with the gas-powered alternatives, lowering these costs.

What are three tips to cut fuel costs that you would offer to lawn care pros and everyone else feeling financial pain at the pump when filling up?

1. Transportation to and from each lawn can eat up a lot of gas. Consider modernizing with transport vehicles that are more efficient, or reworking routes using logistics practices to minimize driving distance and overlap.

2. Consider the costs and benefits of electric tools and equipment.

3. While gas prices may not remain at their peak, or continue to rise, they likely won’t settle back to their recent lows anytime this season. If you’re a lawn care company, you may find that your competitors are raising rates to account for this extra cost. This is your opportunity to potentially raise rates to cover the cost of obtaining greener technology, or to cover the higher cost of fuel.