Gasoline's Hidden Costs To Consumers

CourierPostOnline — Friday, May 5, 2006

Courier-Post Staff

And you thought a measly $3 per gallon for gas was bad.

Just wait.

If oil prices continue to skyrocket, that Granny Smith apple could cost more at the supermarket. That pepperoni pizza will cost another buck to be delivered to your door.

And not only will those plane tickets for the summer vacation cost more, but so will the toy plane that your kids play with during the flight.

"The effects are far-reaching and it's going to affect things everywhere," said Wende Nachman of the consumer group New Jersey Citizen Action, an advocacy group in Camden[, and New Jersey Citizen Action Oil Group]. "It's going to put a strain on everybody in the process."

Noted Richard Michelfelder, assistant professor of finance at Rutgers-Camden: "There's an energy component to literally everything you buy."

Any item transported by truck – and anything that needs oil to be produced, like plastic – is increasing in price.

As a result, some of those charges are being passed to the consumer. So Michelfelder said we should get used to saying two words: Fuel surcharge.

Already, companies heavily reliant on fuel, like airlines and shipping, have fuel surcharges. UPS, FedEx and DHL regularly change their fuel surcharges based on the price of oil.

Now, with the recent spike in gas over the last few weeks, other businesses -- like movers -- are following that lead.

"It's a hardship," said Bill King of Bill King's Moving & Storage in Cherry Hill. He said his trucks only get seven or eight miles a gallon; therefore, a trip to Cape May costs $25 or $30 more than it used to.

The statewide industry group for movers recently began allowing movers to use fuel surcharges, so King said he is charging that extra $25 for a move to Cape May.

"Most people are quite understanding about it," he said.

"It just trickles right on down to the guy at the bottom. You can't get away from it."

Sometimes Mark Williams feels like the guy at the bottom. The 29-year-old Pennsauken resident delivered pizza for Nando's in Merchantville from 11 a.m. to 1 p.m. Thursday and went home with a whopping $9.

Gas money ate into his tips and salary, leaving him with just enough money to buy diapers for his toddler on the way home.

I. James Curry, another deliveryman, even held a sign during drop-offs Thursday saying it was his birthday. He turned 21, and he needed tips to keep his 12-mile-per-gallon Chevy Blazer on the road.

To help its delivery guys, Nando's has considered raising its $1 delivery fee. But with so many competitors in the area, the owners are concerned about losing business.

Phil Kirschner, president of the New Jersey Business and Industry Association, said old-fashioned competition could protect consumers.

"From a competition level I don't think anybody wants to raise prices too much until they see if this is going to be a permanent spike in gas prices," he said.

Kirschner said businesses are waiting to see if gas prices fall in the next couple of weeks, just like they did a few weeks after Hurricane Katrina.

Jason Ravitz, whose family owns three ShopRite stores in South Jersey, said that truckers shipping goods to his businesses have started to add fuel surcharges to their bills. And energy costs to heat and cool the 80,000-square-foot stores are snowballing.

But those increased costs will not be felt by customers, he said.

"We're going to absorb it and see what we can do, and we would hope that our marketing team could increase volume to compensate for it," he said. He added that raising prices on things like produce "hasn't even been spoken of."

But industry-wide, Jeff Metzger, publisher of Food Trade News in Maryland, said prices at supermarkets have already slightly increased.

"You will see that trickle-down effect, and you will see that on the consumer too, in terms of fewer trips to the supermarket," he said.

Transportation is simply getting pricier, and that's why Best Taxi in Cherry Hill joined its competitors last year during the Hurricane Katrina gas price spike and increased its rates 10 percent.

Scott Boren, manager of Happy Hippo Toy Store in Haddonfield, is feeling the price of oil with almost every piece of merchandise he sells, from sailboats to water guns, he said.

"Almost everything's made of plastic," he said. "Plastic trucks and all sorts of preschool toys for babies, they're all made of plastic."

So far, he's absorbed the extra costs and not raised his own prices, but that can't last forever.

"You just make less money," Boren said. "Eventually that's got to stop. Eventually you've got to raise the price."

Staff writer Jason Laughlin contributed to this report.

Copyright 2006 Courier-Post

Top Top | NJCA Homepage | NJCA in the News