Gas Pains: We’ll be paying through the nozzle for a lot of things

Delaware County Times/Z Wire
STEPHANIE K. WHALEN

Strap on your walking shoes, Delaware County – unless you want to drive to the poor house.

Gas prices hit a record high in the Philadelphia five-county region Thursday at $2.10 per gallon, breaking the highest average price recorded last June.

From commuters to airlines, the nation’s growing gas pains have already cramped vacation plans and local businesses that rely heavily on deliveries and reasonable gasoline and diesel prices.
And analysts don’t see much relief in sight, even after crude oil prices dropped $2 a barrel Wednesday.

The problem, Energy Information Administration economist Neil Gamson said, was high demand for crude oil, which is refined into petroleum products like heating oil and gasoline.

“Several factors have raised crude oil prices,” he said. “Some of it has to do with growing demand from other countries like China and Asia, whose economies are booming. In the United States, demand is growing because of the cold, late winter on the East Coast.”

At the same time, Gamson said that crude oil production hasn’t kept up with demand. The United States alone guzzles 21 million barrels a day.

“Most countries that produce oil are producing all-out,” he said. “Demand is so strong that just about every other OPEC producer is producing as much as they can. It’s a tight market.”

Wednesday, the Organization of Petroleum Exporting Countries announced it would increase production by 2 percent, or 500,000 more barrels daily.

But for a significant drop in crude oil prices, Gamson said demand would have to decrease worldwide and keep prices down for a sustained period of time – at least several weeks to a month.

“Prices are coming down a little bit the last day or two, but crude oil still costs more than $50 per barrel,” he said. “In the longer run, prices could drop if people’s driving habits change, or we see more efficient automobiles or new oil discoveries. But nothing will drive prices down significantly in the short term.”

What to expect

Higher gas prices mean higher airfares, and may force couriers, moving and landscaping services to charge extra fees.

Discount airlines like Southwest, which have increased competition among carriers in recent years, were forced to raise fares by $1 to $3 as a result of higher gas prices, said spokeswoman Marilee McInnis.

“Rising gas prices are a great concern in the airline industry as a whole,” she said. “But it’s important to remember that we’re still in a low-fare environment.”

After all, a few extra dollars for a flight to the Bahamas may not be enough to deter a beach-bound traveler from sunshine. Free shuttle service to and from the Philadelphia International Airport doesn’t hurt, either.

But for struggling airlines like US Airways, extra fuel costs may be the last straw.

“For every dollar a barrel of oil rises, it costs US Airways an additional $2 million per month,” said spokeswoman Amy Kudwa. “If fuel prices continue at this level, fuel will be the largest cost for 2005 — exceeding labor, which traditionally costs airlines the most.”

In the long run, however, McInnis said she doubts higher fares would stick around – at least for Southwest, which pre-bought more than 85 percent of its fuel supply at $26 a barrel.

“Air travel still provides people with a viable alternative to driving,” she said. “People will continue to travel by air because it costs more to get in their cars.”

Record-breaking gas prices are proving taxing to local couriers, movers and cabbies, whose jobs keep them behind the wheel of gas-chugging cars and trucks.

“It’s killing us,” said Ken Wiltshire of Del-Val Messengers in Tinicum. “We have a 10 percent surcharge right now, and it will probably go up to 13 percent very soon.”

The courier service delivers nationwide with seven company-owned vehicles and 20 independents. But after seven years in the delivery business, Wiltshire knows that higher gas prices are never a good sign.

“If prices keep going up, there’s always a fear that people will stop using us because our rates will be too high,” he said.

Taxi cab drivers like Paul Rule of Colwyn know about the price of higher gas rates all too well.

Driving for five years around Delaware County, New York and New Jersey, Rule said he noticed he’s been spending more time shopping for gas than he used to.

“I try not to let the prices bother me,” he said, “but you do have to drive around to find the best prices when they’re this high. The cab business is pretty good, but times are tough right now. You take a little less home each night.”

If gas prices rise to $2.35 this summer, Rule said it would be difficult to shuttle riders to warm-weather hot spots like Atlantic City and Manhattan.

“The price of diesel fuel is just nuts,” said Bud Bissonette, manager of B & S Tree and Landscape in Sharon Hill. “Gas runs us about $80 per day.”

With two trucks, a chipper, a stump grinder and several jobs on the Main Line, Bissonette said the $2.35 per gallon price tag for diesel fuel may force a gas surcharge for the first time in his company’s three-year reign.

“At this point, we’re trying not to charge for fuel,” he said, “but it’s just costing us so much we’re going to have to.”

The good news

Travel agencies estimate higher gas prices won’t hurt the upcoming tourist season, and automobile and RV dealerships seem relatively unscathed by skyrocketing diesel and gasoline rates.

“As far as our business, we haven’t seen anything that would hinder people from traveling yet,” said 20-year travel agent Nancy Decarlo of Cloud Nine Travel in Havertown. “Airlines may raise their prices, but people are still calling us for flights.”

AAA spokesperson Heidi Van Vooren said the seemingly undaunted travel industry in the face of astronomical gas prices has a lot to do with how Americans feel about vacations.

“Even though gas prices are over the $2 mark, we still see that people are traveling,” she said. “Driving is still the most affordable way for families to travel. Most Americans’ mind set is that they’ve worked hard all year, and they’re going to take that vacation.”

Sean Weir of Colwyn probably won’t let high gas prices keep him from his summer trip to Wildwood, N.J., this year – unless he can’t find anyone to drive him.

“This year, it looks like someone else is driving me to wherever it is I’m going,” said Weir, who has been traveling to Wildwood every year since childhood. “The only pool I’m gonna be in this summer is a car pool.”

Motor coach companies like Greyhound that offer coast-to-coast trips also provide cost-effective alternatives for travelers that prefer to keep their feet on the ground – with no fare hikes in the near future.

SEPTA spokesman James Whitaker said he doesn’t expect public transportation fares to increase, either – at least until summer’s end.

Higher gas prices certainly didn’t hurt dealerships like Conicelli Toyota in Springfield, which sells fuel-efficient electric-gas hybrid cars.

“Hybrid sales are going through the roof,” said Conicelli Toyota manager Glen Beck. “At some dealerships, there’s been a year waiting list for the Toyota Prius, which doubled its production a couple of months ago.”

He said the Toyota location ordered 10 hybrid Highlanders in advance of their showroom debut in June, and 40 for its Conshohocken location where he was a salesman for 17 years.

But against all odds, he said SUV sales haven’t changed even though they average about 20 fewer miles per gallon than hybrids.

Surprisingly, salesman Robert Suppa said RV sales haven’t seen a drop in sales, either — despite an average price of $199 per day, and 44 cents per mile.

“People have saved up a long time to do this type of travel, and compared to cars, vans and flights, it’s still very economical to use a motorized RV,” said the three-year salesman at Stoltzfus RV’s and Marine in West Chester. “There are ways of getting around the prices of fuel; people could stay at locations longer, and fuel prices are a little lower as you leave the area.”

Suppa said he still sells between 40 and 50 units per month, even with high diesel and gasoline prices.

But for those who are less optimistic about paying more for gas, there is good news — at least you’re not in Hawaii, shelling out $2.43 per gallon.

Delaware County Times/Z Wire