Whose pocketbooks are hit by $2 gas prices
From truckers to floral delivery shops, consumers and businesses cope with record-high energy costs.
In Sherman Oaks, Calif., pizza seller Sayed Amirneazhad is paying his delivery men an additional $250 to $300 per week for their gas, just enough to put his shop - along with doubled costs for cheese - in the red, week by week.Skip to next paragraph
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In Fullerton, Calif., produce shipper Chris Puentes says his firm is swallowing the 8 percent hike in surcharges that companies are charging to haul his melons, avocados, and corn across the US.
In Norfolk, Va., independent trucker Sandy Tyson is spending $140 to $240 more a week on fuel, just enough to make her life as single parent untenable. "I just had to decide whether to pay a doctor bill for my teenager or replace bald tires on my truck," says Ms. Tyson. "My truck lost."
With diesel and gas prices soaring to the highest levels in 13 years, the pinch at the pump is stinging at every level of the American economy.
Many of those being hit are the obvious ones: the drivers of Peterbuilts, those crisscrossing the country in their Winnebagos, anyone who commutes more than a block in a Chevy Yukon or Ford Expedition.
But the high prices are also squeezing businesses both big and small, from floral-delivery boutiques to airlines to bus lines to operators of aluminum smelters. And predictions are it isn't going to get better any time soon.
"Anyone who is in the business of moving goods around is having to deal with significant increases in their business costs," says Jack Kyser, president of the Los Angeles Economic Development Corporation. "For those who are making little or no profit, it can be just enough to end their reasons for doing business at all."
The digits on pump dials across the US are sobering. Earlier this week, the US Department released a report that gas prices are approaching the symbolically important threshold of $2 a gallon: It said the average price nationwide has hit $1.94.
While that is still well below the peak high in 1981 when inflation is factored in, it nonetheless represents a 45-cent increase over the cost of gasoline just a year ago. In many areas - notably California - prices have topped $2.20 for weeks.
Behind the rise is the spike in crude oil prices, which this week surpassed the $40 a barrel mark - the highest level in more than 13 years. Production cutbacks by major producers, coupled with recent attacks on oil facilities in Iraq and Saudi Arabia and rising demand from countries like China, are driving the prices.
All this means that Mr. Amirneazhad now has to watch the cost of gasoline as much as he does the price of anchovies and pepperoni.
"I want to charge more for the pizzas but for now I can't because of contracts and advertising," says Mr. Amirneazhad. "If this goes on, it will bring so much hardship, I will have to move onto something else."
In California and parts of Virginia soaring diesel prices have prompted truckers to stage protests ranging from honking horns and carrying signs to blocking traffic with abandoned trucks. In one year alone, fuel costs have risen 35 to 43 percent. Two weeks ago, hundreds of California's independent truckers in Oakland didn't show up for work, threatening to stop the flow of goods at the nation's fourth-busiest harbor.
Truckers claim steamship lines - ships that transport containers of goods from all over the world - are allowed to pass a surcharge on to their customers when gas prices go up, but have not increased the income they pay truckers.
"Last year I took in $76,000 which sounds like a lot," says Virginia trucker Tyson, who has two teenage boys and a 9-year-old daughter. "But by the time I paid for fuel, tolls, insurance, and permits, I took home $23,000. That's not enough to live on."
To make her point, last week Tyson joined several hundred truckers who parked their trailer rigs outside the Hampton Roads, Va., port. "We just wanted them to know we are not out to ... shut down their port, we just want them to understand we can't work for free," says Tyson.
For many struggling small businesses rising gas prices are only part of the problem. Central Valley farmers in California, for instance, have been facing increased labor costs, workmen's compensation rates, equipment costs, irrigation pumping costs, and fertilizer costs.
Grocery stores trying to maintain costs for customers who don't like bouncing prices kick back additional costs to the farmers and food distributors as much as they can.
"Right now, we are taking the hit in profits ourselves because the markets will not allow us to pass the costs on to consumers," says Mr. Puentes, owner of Interfresh Inc a fresh fruit distributor. "Very soon we will be having talks about raising the costs of everything we sell."