Posted on: Sunday, May 30, 2004
High cost of gas extends beyond pump
By Doug Abrahms
Gannett News Service
WASHINGTON — Consumers feeling the pinch of $2-a-gallon gasoline could also start seeing higher prices when they buy groceries, get a pizza delivered or catch a cab.
Gannett News Service Some examples of rising prices:
• Hormel Foods is raising prices on Spam, Dinty Moore stew and Chi-Chi's salsa by at least 4.5 percent because of increased costs.
"This is the first price increase we've taken since 2000," said spokeswoman Julie Craven.
• Birds Eye Foods, maker of frozen vegetables, pretzels and salad dressing, is raising prices at least 5 percent next month partly because it's paying more for shipping and for plastic bags, which are made from petroleum products.
• Bridgestone Corp. will raise tire prices 5 percent next month because it's paying more for the petroleum to make the tires and more for the gasoline to ship the tires around the country.
"The last thing anyone wants to do is raise prices," said spokesman Dan MacDonald. "But in the face of rising costs, there's just no other alternative."
Many trucking companies, especially the large ones, tack on fuel surcharges during times of high diesel prices. Swift Transportation Co. Inc. of Phoenix added an additional fuel surcharge for moving goods on the West Coast, where diesel prices were 40 cents a gallon higher than the national average last week, according to company spokesman Bill Riley.
Filling up a 300-gallon gas tank on a tractor-trailer on the West Coast averaged $660 last week — more than $200 higher than a year ago.
"If this hangs on for a couple months, it's going to show up in our prices," said Bob Costello, chief economist for the American Trucking Association.
Unlike during other price spikes in fuel over the past few years, experts say this time manufacturers and retailers have started raising their prices because the improved economy means people can afford to spend more on goods. Also, many companies cut costs in the past few years to keep prices flat, but that cannot go on indefinitely.
Sunkist, the cooperative that provides about 60 percent of the nation's eating oranges and grapefruit, pushes its higher fuel charges through to the stores, said spokeswoman Claire Smith.
Supermarkets have yet to pass through most price increases but that will change this summer, said Jeff Metzger, publisher of Food World, a trade publication.
Already, meat and dairy prices are up, and higher trucking costs will hit a lot more commodities, Metzger said.
"You can't swallow these kinds of increases, especially in such a low-margin business as the supermarket business," he said.
Some companies cannot pass through higher energy costs because they fear losing business.
Continental Airlines slapped $20 to $40 surcharges onto round trip tickets earlier this month because jet fuel is so high. But the airline was forced to remove those fees because competitors wouldn't follow suit immediately.
Last week, however, United Airlines raised its fuel surcharge by $10 per roundtrip to a total of $30 on all North American flights.
Manufacturers have been hit hard by the high price of oil, a major component used to make plastics, said Thomas Metzger, spokesman for the American Plastics Council. Most U.S. manufacturers switched to natural gas instead of petroleum to make their products, but the price of that fuel also has risen dramatically, he said.
Higher gasoline prices mean higher costs to ship goods to the store, from stew to salsa, and some retailers have started passing on those costs. Lawn-mowing and trash-collecting services are charging more because of high gas prices. And manufacturers that use oil to make plastics or operate their plants also are trying to pass on higher costs to consumers.
The high cost of fuel for truckers like Yvonne Mendoza of Fontana, Calif., may be passed on to businesses and consumers. High gas prices are increasing the cost of food and other goods and services.
