Fuel cost impacts your cost
www.southeasttexaslive.com DAN WALLACH , The Enterprise 03/11/2003
Truck drivers are fond of saying that if something isn't growing, it was brought there by a truck.
BEAUMONT - Truck drivers are fond of saying that if something isn't growing, it was brought there by a truck.
It takes fuel to get a truck from one place to another.
The direction that prices at the fuel pump will take in the next several weeks also will determine whether the prices of consumer goods and services will begin to climb, too.
"We're biting the bullet right now," said Jake Mazzu, owner of a produce business that supplies restaurants and food stores.
His company operates a fleet of 20 vehicles that buzz across Southeast Texas on multiple trips Monday through Saturday.
"If gas goes to $2.50 a gallon, we'll have to limit our runs. Instead of constantly going back and forth, we'll have to combine or limit trips."
Mazzu said he is not imposing a fuel surcharge on his customers.
"In lieu of going up on our customers, I'm doing the best I can to make little cuts," Mazzu said.
Typically, Mazzu said his gasoline bill runs anywhere from $2,000 to $2,500 per week. But current prices - about $1.52 to $1.59 at most pumps in the Beaumont area - sent his weekly bill to about $3,000.
"If we have a war, and we can get oil from somewhere else, it might back off a little," he said. "But it might go to $3 a gallon. The uncertainty is more of a problem now."
Roy Steinhagen, president of Steinhagen Oil Co., which runs convenience store-filling stations in Southeast Texas, shares Mazzu's feeling of uncertainty.
"We're at the mercy of suppliers," he said. "The effect of the war is unknown. Venezuela is an unknown."
The United States is poised to invade Iraq to depose Saddam Hussein, adding volatility to one of the most unstable regions in the world.
Political unrest in Venezuela, another major supplier of crude for the United States, also has reduced that supply, which has cut domestic inventories.
"We've had no trouble getting supplies," Steinhagen said. "Costs have been basically stable for the past couple of weeks. When futures go up, ours will go up accordingly."
He referred to the futures market at the New York Mercantile Exchange where prices for delivery in the coming months have shot up dramatically in the past few weeks.
"There are too many variables to crystal-ball it," Steinhagen said.
Supermarkets are a place where consumers could begin to see higher prices in case pump prices begin to spike upward.
For now, however, a major national chain and a local chain are standing pat on prices.
"Our diesel purchases are locked in for a number of months," said Kroger Food Stores spokesman Gary Huddleston.
"The marketplace is so competitive, it absorbs some of that," he said. "In the long-term, you could see an impact. But so many factors affect the long-term."
At Market Basket Food Stores, headquartered in Nederland, spokeswoman Caira Franz said that chain has no plans to increase its prices to cover the higher costs of transportation to bring in groceries and other goods.
"We're not noticing any difference in pricing yet," she said. "That's good news."
It isn't just motor fuel prices that have risen steeply, either. Natural gas also hit a peak recently, nearing historic highs.
Bill Munro, president of Munro's Dry Cleaners, said his natural gas costs to run his boilers are running 60 percent more than he usually pays.
"This started about four months ago, and peaked this month," he said. "You can't pass it along for the short-term to the consumer. You've got to bite the bullet. But if things stay the way they are - another 60 days - we'll probably start passing some of it along."
Reach this reporter at: (409) 833-3311, ext. 450 dwallach@beaumontenterprise.com