|
Soaring gas prices siphoning dollars from businesses, consumers
By Jerry Miller
Contributing Writer
With gasoline prices nearing $2.25 per gallon, the highest in the region’s history, and the cost of diesel fuel near or at that level, the impact of escalating fuel costs on business is already being felt.
And, depending on how high prices go, every sector of the economy is expected to take at least a partial hit.
“I never thought I’d see a sign for more than $2.00 per gallon,” says Tom Sponseller, president of the Hospitality Association of South Carolina. The Columbia-based group and its 1,800 members are the voice of the state’s hotel, resort and restaurant industry. “Recent increases of as much as 18 cents per gallon in a two week period have surprised me.”
While local business owners, especially small business proprietors, are feeling the pinch, they’re certainly not alone. Around the country, businesses are beginning to see the first signs of trouble and are responding by passing higher fuel costs to customers.
According to a recent report in the Christian Science Monitor, in Guilford, Conn., the owner of “Flowers on the Green,” has raised the price of delivery from $6 to $8, to offset gas prices. In La Jolla, Calif. Dominos, the pizza giant, has increased, by five cents, the amount paid to drivers who deliver the hot pies and a New York City moving company now charges customers $15 more per hour to move from one apartment to another in the city.
And, there is no end in sight, as crude oil prices remain well above the $50 per barrel mark, at times inching toward $60.
Tourism rolling along
Calling gas prices “just one factor in the bundle,” Chad Prosser, director of the South Carolina Department of Parks, Recreation and Tourism, contends, at least for now, pump prices are not expected to impact the number of summer tourists.
To drive home his point, Prosser says Charleston area hotels’ occupancy rates in January and February were up 8% over the previous year, at the same time gasoline prices began to increase.
“Gas prices really don’t have an impact either way. It’s only one aspect of pricing a vacation,” he insists.
Rather, Prosser says, the decision to take a vacation has more to do with disposable income, consumer confidence and the amount of time a family plans to spend on holiday.
Even with rising gas prices, people will come, although they may have to reconfigure their travel budgets, spending less money on souvenirs and restaurants, as they spend more for fuel, he says.
Al Parish, professor of economics at Charleston Southern University, echos Prosser, saying the need to spend more for gasoline means the average tourist will spend less on food and other items.
“Rising gas prices will have a slowing effect on the economy,” and will “creep its way into the overall level of inflation,” Parish says.
Rising gas prices alone would not cause people to postpone this year’s trip. However, if prices remain high, next year’s tourism figures could be affected, with more people deciding not to take a vacation or taking shorter trips, Parish says.
Asked if his members are worried about the impact of rising gasoline prices on tourism, Tom Sponseller responds cautiously. “It really depends on how long this goes on and how high the prices go. Whoever thought we’d see $2.20 per gallon?”
Recalling the long gas lines of the 1970s and the prospect of rationing, Sponseller says the state made out well, as tourists opted to vacation closer to home.
“There is no way to know for certain what impact this will have,” says Perrin Lawson, deputy director of the Charleston Convention and Visitors Bureau. “Initial national data indicates this will be an extremely good year for tourism.”
Sponseller contends the most significant impact of escalating fuel prices might not be on the number of tourists, but rather on the cost of the food they buy in area restaurants. “Rising fuel prices will drive food prices up and, like any other business, restaurants will have to pass it on. Minor menu (pricing) changes can occur.”
How high will it go?
So, for tourism, how high would the price of a gallon of gas have to go in order to drive down the number of visitors?
“Is $3 per gallon the psychological threshold? Perhaps, but we don’t know,” Prosser says.
Mary Graham, vice president of public policy for the Charleston Metro Chamber of Commerce, says if the price hit $3 in the Charleston area, “we would weather it by going after short-distance vacationers,”
Asked if the current fuel prices make her “nervous,” Graham says, “Not for the long term. There is no shortage of gas. It’s not a supply question.”
Trucking feels the pinch
But Graham is not so sanguine when it comes to other sectors of the economy, noting the Port of Charleston will be hard hit, as will the region’s trucking industry. “Truckers are really feeling the impact. Fuel prices will impact anyone with a trucking fleet and anyone having to deliver goods.”
For area trucking companies, fuel surcharges, ranging from 12.5% for partial loads to as much as 26.6% for full loads, have become routine.
Southeastern Freight Lines in North Charleston has imposed surcharges of 12.5% for partial loads and 23.5% for full trucks.
“Rising gas prices have a significant impact on this business,” says Kevin Quinif, terminal manager for Southeastern. “People with fixed freight charges are not doing well. A lot of them are struggling. I’m not certain how they get by. At $2 and $2.50 per gallon (diesel), it will take a lot of surcharges to make your money back.”
Southeastern isn’t alone in imposing surcharges. Averitt Express has an 11.5% charge on partial loads and a 23% levy on full trucks, while FedEx and Saia Inc. each have 13.3% surcharges on partial loads and 26.6% on full loads.
While he doesn’t deal with independent truckers, Quinif says: “I don’t see how they can stay in business. I would think, at some point, independents can’t afford to operate.”
And, what if diesel prices hit the $3 mark? “That will spark a whole new debate,” Quinif insisted, adding, “It’s a matter of time before it does.”
Retailers affected
Small retailers are already beginning to experience some pain, too.
“Most definitely it’s having an impact. Gas prices are keeping people closer to home,” says Susan Rawlings, a sales associate at A Corner on the Market, a high-end jewelry operation in Charleston.
Rawlings says before the run up, spring shoppers came from as far away as Michigan, New York, Pennsylvania and Massachusetts. “We’re not seeing an awful lot of them right now.”
What she is seeing are customers closer to home, from North Carolina, Georgia and Florida.
“The moment prices hit $2.50 and $3 per gallon, people will shop closer to home,” she says.
John Ryan, general manager of the one-million-plus-square-foot Citadel Mall in West Ashley, says he’s “not particularly” worried about the summer tourist season.
Ryan says while it is “too early to tell” what the summer will bring in terms of tourists and gas prices, the big factor in determining the success of the summer will remain the amount of disposable income a shopper has.
“People will make adjustments,” in how they spend their money, he adds.
|
E-Mail This Article
Printer-Friendly Version