Businesses feel effects of higher gas prices
UCAN In the Media
Rising Gas Prices Pumping Up the Cost of Doing Business
San Diego Business Journal Staff
Posted March 17, 2008
Average gas prices will likely reach well into the $3.60s this week, analysts say, forcing local businesses that depend on the roadways for revenue to deal with higher costs.
The average price in San Diego for a gallon of unleaded regular gas was listed at $3.53 as of March 10, jumping 5 cents the next day and continuing to rise into midweek.
A fuel tracker survey produced by the nonprofit Utility Consumers’ Action Network placed the low price at $3.19 in La Mesa and San Carlos and the high at $3.93 in Pacific Beach on March 10.
“It’s very expensive to do business in California,” said Scott Alevy, spokesman for the San Diego Regional Chamber of Commerce. “Whether it’s health care costs, the costs of utilities or the cost of gas.”
As for the buzz that $4 per gallon of gas will be the norm by the start of summer, the market may steady itself before then, according to Charles Langley, a gas analyst with UCAN, a San Diego-based consumer watchdog. He did note that the price of diesel hit $4 a gallon last week and that current prices are being driven up by speculation.
“Some days it looks like it’s around the corner,” he said of $4 a gallon. “Other days it seems far away.”
While San Diego gas prices are usually about 10 cents higher than those in Los Angeles, the two cities were at a parity March 10, with Los Angeles’ average price reaching $3.52 — something that could be a good sign for the volatile market, Langley says.
On March 10, 2007, the average price hovered around $3.10 for unleaded gas in San Diego, he says.
Business Effect
Organic To Go Food Co. Inc., a Seattle-based organic retail and delivery chain, has not been affected much by rising gas prices, says Jason Brown, chief executive officer and founder.
Although 40 percent of revenue comes from its catering division, the three-year-old company uses a hybrid fleet of Toyota Priuses and Scions, as well as strategically placed commissary kitchens, to minimize fuel use.
“Gas has been rough for a couple of years,” said Brown, whose company has eight Organic To Go cafes and one commissary kitchen in San Diego County. “It’s not really affecting us. We planned for it.”
It’s a mind-set shared by delivery powerhouse UPS. Conservation practices introduced years ago are keeping costs lower for the Atlanta-based package delivery company.
The company maintains a fleet of 1,600 alternative fuel vehicles as well as route-planning technology that puts drivers on a more effective right-hand loop, says Karen Cole, spokeswoman for UPS. The company also buys fuel in bulk and maintains its own filling stations.
Just Another Worry
At the Van Ommering Dairy Farm in Lakeside, conservation has been squeezed as far as it can go for owner Dave Ommering.
He says rising prices for diesel, used to fuel the tractors and hay trucks, and higher feed costs have caused concern for him. Corn prices have gone up 40 percent in the last six months.
While the cost of fuel is still critical, he said that it’s “just another cost for us,” especially compared with feed prices.
Langley said March 10 that consumers have been playing the proper role by shaving off personal gas allotments, but panic and speculation are what have driven prices to a national record.
Marie Montgomery, a spokeswoman for the Automobile Club of Southern California, agreed with Langley’s statement about the volatile market and speculation driving up prices.
“We’re literally paying future prices,” Langley said.
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