DELAWARE--Higher Fuel Prices are Digging into Profits Beyond the Pump : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread


Pump, pay, and pay again Price may hit $2 or more by July

By BILL YINGLING Staff reporter 03/19/2000

In services such as trucking, travel and the local courier delivery business, companies are no longer willing to absorb rapid increases. And in some cases, they are passing them on to customers.

"We've been trying to ride it out," said Sean Kennedy, operations manager at Parcels Inc., a courier service in Wilmington.

But last week, Parcels decided to pass on the higher fuel prices to its customers by tagging a 10 percent fuel charge onto delivery bills.

The decision reflects the kinds of choices consumers and businesses are being forced to make as they feel the squeeze of higher fuel costs.

"I never have a full tank anymore, ever," said Marcie Lanzoni, 17, of Newark, who bought gas recently at a Texaco on Kirkwood Highway. "I'm always driving around on 'E.'"

The average price of a gallon of regular gasoline in Delaware is about $1.51, according to a survey released this week by AAA Mid- Atlantic. The price is up 17 cents from February - and 51 cents from a year ago. Fuel prices have been climbing for a year since oil-exporting nations agreed to cut output. Analysts are predicting that gasoline could reach $1.80 to $2 a gallon or more by the summer driving season.

Nationally, soaring energy prices helped drive wholesale prices up 1 percent in February, the largest jump in nearly 10 years, the federal government said Thursday.

Mark Bock, senior economist with RFA/Dismal Sciences Inc., of West Chester, Pa., said gas-related price increases are filtering through the economy and will lead to a slight increase in inflation

"It's showing up slowly," Bock said.

Oil exporters are scheduled to meet Monday in Vienna, Austria, where they're likely to agree to boost oil production, which could lower prices, Bock said.

But experts predict consumers would not see any relief for at least six weeks, the time it takes for crude oil prices to be reflected at the pump.

Bock said he expects gasoline prices to fall again by early fall. "Once we get past the summer, I think things are going to cool down a bit," he said. +"You+re not going to see [gas prices] staying at $1.80. They'll be back down."

Nevertheless, many businesses are saying they no longer can absorb the price increases, even if they are temporary. And they are starting to pass the costs onto customers.

Parcels, for example, will start applying the 10 percent fuel charge Monday.

It will add $2.50 to a typical $25 bill for a delivery in New Castle County, Kennedy said.

All major airlines imposed additional fuel charges on their ticket prices in January. And Northwest Airlines last week boosted its business fares again by up to $40 and leisure fares by up to $20.

Joan Simmons, owner of Travel Travel Inc. in Newark, said her company asked about 300 University of Delaware students to pay an additional $20 on spring break travel packages because of rising fuel costs.

"These kids thought they were paid up by January," Simmons said.

Simmons said the additional fuel charge has created problems in her business.

"We had to stay late and call the people and make sure they brought their money in because the tour companies wouldn't send them their documents until the fuel surcharge was paid," Simmons said.

Dominic Gatta, owner of Packaging Plus, a shipping service in Claymont, said Federal Express has been charging him a fuel surcharge of 3 percent since early February.

Gatta has been absorbing the extra cost so far. "You try to maintain your customer base," he said. "You've just got to wait it through and make some adjustments."

But, Gatta said, "If it continues, I'll have to change my rates."

John A. Schwartz, 33, manager of Captain's Catch Seafood market on Kirkwood Highway, near All Saints Cemetery, said costly diesel fuel is hurting his bottom line.

"Diesel, you can track that all the way down - from the tanks in the boats that catch the fish to the trucks that deliver to our market," Schwartz said.

Schwartz said he has been absorbing the price increases, but said he will raise them if fuel prices remain high much longer.

Bob Shank, an agent for Jones Motor Freight Special Commodities Co., of Bear, said all of his customers are paying extra fuel charges.

Shank's company, which hauls steel on flatbed trailers, tries to avoid deliveries in towns where it cannot pick up another load to pay for the return trip, he said.

"It costs as much to drive the truck empty as it does full," he said.

Higher gas prices also are squeezing the pocketbooks of volunteers at Meals on Wheels Delaware, which provides a noontime meal five days a week to about 3,500 senior citizens throughout the state.

Many of the volunteers are senior citizens on fixed incomes, said Jim Thornton, executive director of the program. They spend their own money to fuel their cars and deliver the meals. One rural route in Kent County is an 80-mile round trip. Another in Sussex is 30 miles for two clients.

None of the volunteers have quit, Thornton said, but some have asked for shorter routes.

"At this point, we+re just exploring what we can do to help some of the volunteers," Thornton said.

DART First State, which operates the regional bus system, has been buffeted from the higher prices because it purchases its fuel under a fixed-price contract signed prior to the recent increases, said Drew McCaskey, spokesman for the transit system.

The city of Wilmington, on the other hand, is being forced to shoulder the higher costs, said Vici Douglas, a city spokeswoman.

Retailers in Millsboro are in a price war. Two gas stations are underselling their nearest competitors by at least 4 cents a gallon.

At the Wawa food market, a gallon of regular unleaded is selling for $1.45, the same next door at the Millsboro Shell. The price is a little higher across U.S. 113, at Texaco and Amoco stations.

Customers on Thursday afternoon were lining up two-deep at some of the 12 pumps at the Wawa.

Nick Alvaro, owner of the Shell station, said the competition with Wawa is cutting into his profits.

He's been shaving his prices to keep the cars rolling in. "I'm biting the bullet," he said. "I have to."

-Staff reporters Dennis Thompson and Chip Guy contributed to this article.

-Reach Bill Yingling at 324-2877 or

-- (, March 19, 2000

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