By Shelia Watson
Contributing Writer

The recent high prices at the gas pump, and the ripple effect into other industries and ultimately the consumer’s pocketbook, are likely temporary, according to Al Parish, director of the Center for Economic Forecasting at Charleston Southern University.

“We’ve had that situation before,” Parish says. “They’ll tack on a surcharge to help with the additional cost, and they’ll keep it until the prices come back down. And even if gas prices weren’t to come down, eventually the surcharge would disappear, mainly because people will refuse to pay them. If people raise prices when others are coming down, they’ll be at a competitive disadvantage when the competition removes the surcharge.”

In the end, Parish says, the market will determine the outcome.

“We’ve already seen gas prices coming down somewhat in the area, anywhere from 10 to 30 cents. But some places are taking advantage of the situation. For example, Mount Pleasant is a rip-off when it comes to gas—it’s 30 cents higher there than in North Charleston. Nobody in their right mind is going to pay that deferential unless they never leave Mount Pleasant,” he says.

Parish insists there is no gas shortage.

“We had a temporary problem because some people panicked and went to top off their tanks due to some ridiculous rumors about a shortage. There’s no reason for prices to do what they’ve done other than speculation,” he says.

Among the more pressing issues, he says, is price gouging. “I do think we have a problem with gouging, and I wish the governor’s office would do something about it. Some have said nothing can be done because we don’t have a state of emergency here. But after 9/11, we didn’t have a state of emergency then, and (then) Gov. Hodges enacted a gouging ordinance for two weeks.”

A bigger concern

Another concern for Parish is the rising cost of natural gas. “It’s already way up and may continue to rise because we’re going into the season when demand is going to be high. And it’ll have an impact on electric bills and heating costs. Plus, natural gas is a large input into manufacturing processes. Just about anything that’s manufactured requires natural gas. That worries me in regard to overall inflation.”

Tom Crosby, vice president of communications for AAA Carolinas, agrees. He says the next several weeks will likely lead to higher prices for every consumable, from milk to office supplies to building materials, as the cost to transport them will reach levels never before experienced.

Laura Varn, vice president of corporate communications at Santee Cooper says, “There’s an ongoing issue in the energy industry with the overall rising cost of fuel that’s leading to an increase in cost for customers. A number of coal companies have gone bankrupt, some of which we had contracts with, and we’ve had to work with other coal companies.

“Also, there are some transportation delivery issues with railroads in getting coal and natural gas to us. There’s also been an increasing higher demand for coal and gas over the years. And on a national level, there are very few new coal mines because of strict permitting issues. It’s simply a supply and demand issue. The demand is very large, and supply just isn’t able to keep up at the moment.”

None of the rising fuel cost issues are related to Hurricane Katrina, Varn says. “We do have a limited amount of oil and gas that we get from that region, but we already have a lot in reserve, so that’s not going to show up in any impact to the customer. There is no fuel supply shortage. Seventy-five percent of what we use for fuel is coal, and most of our product comes from Kentucky and Pennsylvania.”

For Parish, however, the hurricane’s effects remain a serious concern.

“It worries me what impact this storm will have on expectations for the economy in general,” he says. “People are very troubled about what’s happening on the Gulf Coast, and they’re generally not happy with the government’s response. A lot of people have been glued to their (television) sets watching the devastation, and it all has an impact on consumer confidence and spending. I think the next couple of quarters are going to be close to recessionary.”

Yet soon after, Parish says, there will be a building boom in the Gulf area. “It will ripple across the nation. It’ll mean stronger growth, but that too has its downside. You’re gong to see lumber, steel, concrete, things like that take a jump because of the crimp in supply.”

Parish predicts that next year there will be large increases in demand, not only for materials, but also for labor, especially framers, plumbers, electricians and masonry workers, which will increase the cost of labor across the country.

Drivers need to conserve

In the meantime, both Gov. Mark Sanford and Charleston County officials have urged drivers to be as conservative as possible with fuel and have halted certain state and county services that are not considered to be essential.

“Our essential services, such as providing ambulances in an emergency, must continue,” said Roland Windham, Charleston County’s administrator. “So we are looking for areas we can alter temporarily but maintain a level of minimal impact to our citizens.”

Agencies cut back

Many government agencies are cutting back on some services. In Charleston County, the Department of Public works has temporarily suspended routine roadside mowing, except to cut back growth at intersections for safety reasons. And for most county sites, the grounds crews will be temporarily put into a once-a-month mode.

The county’s Emergency Preparedness and Hazardous Materials Departments employees who take home a vehicle will temporarily move to a four-day workweek to conserve fuel.

The state has received a number of federal waivers to help cope with shortages, including an easement of the emissions standards and permission to tap into a reserve of winter fuel stored in North Augusta, S.C.

“There are a couple of things we need to do over the next couple of weeks when it comes to weathering this storm,” said Gov. Mark Sanford. “One, it’s a chance to ride to the Friday night football game with a neighbor, ride to lunch with a co-worker or ride to the grocery store with a friend from down the street. Two, it means literally remembering your neighbor at the gas pump and not attempting to fill up every five-gallon tank you’ve got in the back of the garage. These kinds of common-sense conservation measures spread across 4 million people will go a long way toward getting us through this storm.”

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