With gas prices surpassing $4 a gallon and reaching an all-time high in Iowa, some area businesses have decided it’s in their best interest to help their employees manage the rise in prices. Starting in April, employees of Great Western Bank — now a division of First Interstate Bank — making annual salaries of $65,000 […]
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With gas prices surpassing $4 a gallon and reaching an all-time high in Iowa, some area businesses have decided it’s in their best interest to help their employees manage the rise in prices.
Starting in April, employees of Great Western Bank — now a division of First Interstate Bank — making annual salaries of $65,000 or less received an initial payment of $130, followed by an additional $65 for each payroll through June.
“We’re in a lot of rural and metro markets, and for our employees of a certain salary range, we just felt it was important to take care of them,” said Melissa Schooley, Eastern Iowa president at First Interstate Bank. “We were really trying to be proactive.”
She says they are evaluating if the fuel stipends will be extended but that “as long as gas prices are elevated and it continues to put a strain on people, we want to make sure that we’re taking care of our employees.”
Kirkwood Community College kicked off a four-day work week pilot program this summer, under which staff with no Friday classes will have the day off. The decision is a direct response to high gas prices and record inflation to help staff who must travel back and forth to campus, reported KCRG-TV9. The normal five-day workweek will return in the fall.
National transportation tech firms, like Uber, Lyft and Doordash, have tried helping drivers by adding temporary fuel surcharges and other driving-related bonuses, but those benefits expire for Uber drivers June 15 – and Doordash already ended their weekly bonus program in May.
Supply and demand issue
University of Iowa professor Anne Villamil says extraordinarily high gas prices are simply a supply and demand problem.
“Crude oil is very expensive and the reason is because of the Russian invasion of Ukraine,” she said. “The United States, Saudi Arabia and Russia are the top three oil and gas producers and there is a European proposal to ban oil imports within six months and refined product imports by the end of 2022. As we know, the U.S. and many other countries have been applying sanctions on Russia. So, that’s affecting the supply of oil.”
“And then there are demand effects,” she added. “We got out of lockdown with COVID-19 and there’s been a lot more travel and entertainment.”
While a few companies have attempted to ease employees’ discomfort at the gas station by enacting short-term solutions, there’s no reason to believe gas prices will subside soon, especially while the Russia-Ukraine war is ongoing.
“I see increasing volatility,” Ms. Villamil explained. “A big wildcard is China. China has been having a continuing lockdown in parts of the country due to COVID-19 because they’re following a zero COVID-19 policy. When they lock down, that actually decreases demand for energy. If they fully open up again, that will increase the demand and increase the price of gas further.”
The U.S. Department of Energy has tried increasing the supply by releasing oil from the U.S. Strategic Petroleum Reserves, but domestic suppliers are worried if they produce too much, there could be a sudden price drop amid the geopolitical uncertainties in Europe. In 2020, the price of a barrel was negative because firms had to pay to put oil on tankers, even though demand was an all-time low during the pandemic.
In a bid to incentivize domestic suppliers to produce more, the United States will start purchasing oil to put back into the Strategic Petroleum Reserves, says Ms. Villamil. More growth in wind — especially in Iowa — solar or other renewable energy sectors could also improve gas prices.
Iowa cheaper than most
One consolation for Iowa residents is that gas prices are substantially cheaper than in other states such as California, where some service stations have charged more than the federal minimum wage for a single gallon of gas.
“California has some of the strictest environmental laws in the world,” she explained, noting that smog and air pollution concerns have troubled Los Angeles for decades.
Enacting remote work policies is another way to lower demand and slowly start to reduce gas prices, as well as helping employees with longer commutes, she says.
“We know that works,” Ms. Villamil said. “Absolutely, that will reduce the price. If that works for firms and workers, we know that workers like the ability to work from home. Whether it’s a few days a week or completely, that could help a lot.”
Return-to-office plans have varied by company and by state. Last month, Apple delayed a plan for employees to return to the office three days a week, citing a rise in COVID-19 cases.
“It wasn’t necessarily in response to this, but we already do offer a hybrid model for certain employees to work remotely,” Ms. Schooley said. “That option was previously available and it got ramped up with COVID-19. We leave it up to individual managers now to allow that to happen for employees.”
Although gas prices are a macro-level concern, Ms. Schooley believes companies should try helping employees when they are able.
“The buck stops with us to make sure we are taking care of our employees,” she said, adding that fuel stipend policies have an impact on improving Iowa’s economy at a small level.