Gas prices squeeze holidays
Fill the tank or Christmas stocking? High fuel costs mean residents, businesses face dilemma
Saturday, December 3, 2011
To the old truism that nothing in life is guaranteed but death and taxes, a new certainty has been added in recent years: Grumbling about gasoline prices.
Regular unleaded, which a decade ago averaged $1.11 a gallon — $17.76 to fill a 16-gallon tank — averaged $3.58 a gallon Tuesday in Vancouver — $57.28 for a fill-up. Compare that 223 percent rise in the price of fuel to the 26 percent cumulative pay hike that Clark County workers received over the past decade, and it’s clear that the cost of gasoline is eating into local wallets, or spurring people to change how they get around. It’s also squeezing many local businesses, which have to weigh leaner profit margins against higher prices as the cost of shipping and receiving products and visiting with customers continues to rise.
Although gasoline prices have dropped by about 40 cents a gallon since May, they’re still the highest they’ve ever been at the start of the Christmas shopping season, according to Marie Dodds, director of government and public affairs for AAA’s Oregon, Idaho and Southwest Washington region.
Though a bearable inconvenience for people with wiggle room in their budgets, fuel costs could be eating into Christmas spending for those who live on the edge.
“All I can do is go to the store, go to the doctor, it’s rough with prices going up,” said Joan James of Vancouver, who lives on a fixed income and said her increasingly tight budget means she has no holiday plans this year.
Higher fuel prices may been one motivation behind Black Friday discounts and earlier opening hours at many stores over Thanksgiving weekend. Retailers were worried that stagnating wages and rising prices would result in shoppers running out of money earlier in the season, according to a CNN report. Those concerns appear to have been warranted: Stores selling to lower and middle-income shoppers did worse than expected last month. Although luxury department store Saks Fifth Avenue reported a 9.3 percent year-over-year increase in November sales, sales were up just 2 percent at J.C. Penney and 1.8 percent at Target.
Kathy Nielsen of Vancouver, who regularly acts as driver for her mother, sister and grandson, said she’s combining trips and stopped going to a Portland hair dresser in part because of the cost of driving.
She said she’s not conscious of cutting back her spending, but cash is going toward fuel that she’d rather use elsewhere.
“It’d be a lot more fun if I was paying less money a gallon,” Nielsen said. “I’d still spend the money, but I’d spend it on something more fun.”
As fuel prices contribute to a sales squeeze at some national retailers, Clark County small businesses also face tough decisions.
“We don’t want to price ourselves out of the market, but when we drive it costs us more,” said Patrick Werbowski, a locksmith and co-owner of Harry’s Locksmith in Vancouver.
The company has eight vehicles on the road, and tries to be efficient about planning customer visits to minimize the miles they drive. But it has also had to raise some rates to remain profitable in light of climbing costs.
“At the end of the month, when I get our fuel bill, I have a small heart attack,” Werbowski said. “The price of gas is one of those things you always have to be aware of.”
We can be aware of where fuel prices have been, but predicting where they will head next is increasingly difficult.
AAA’s Dodds said the European debt crisis, controversies in Iran, economic growth in India and China, and political turmoil in North Africa and the Middle East are simultaneously putting upward and downward pressure on prices. Investors’ expectations also affect the price of crude oil, which is responsible for about 68 percent of the price of a gallon of gasoline. (The rest pays for refining, distribution, marketing and taxes.)
“It’s very difficult to predict gas prices tomorrow, next week or next month, because prices are so volatile,” Dodds said. “But I don’t see any major drops or increases in the next month.”
If historic patterns play out in 2012, that could lead to even emptier wallets for cash-conscious Clark County residents. Typically, prices climb after the start of a new year, peaking in May or June before subsiding again.
“When the price of gas increases, it has a ripple effect,” said Dodds of AAA. “Shipping costs are higher. You’re going to pay more for goods at the grocery store that may have to travel a long way by truck. If you send a package via UPS or FedEx, shipping costs may be higher. Small businesses, even something like a pizza delivery company, it’s not uncommon for them to put fuel surcharges into effect. All of us who consume goods and services end up being impacted.”