Higher prices at the gas pump already affecting local business

Businesses search for ways to absorb costs, By Roger Gavan Warwick - The good news is that adjusted for inflation, the average price for a gallon of gasoline is not much different than it was in 1980. The bad news is nobody cares. The average person only knows that he or she is spending twice as much for fuel as they did just a few years ago. Locally, there isn’t a single business that is not affected by the extraordinary rise in the cost of transportation. However, it’s a double-edge sword. Last November, when gasoline was almost one dollar cheaper than it is today, the Warwick Independent Business Alliance (IBA) ran an advertisement in The Warwick Advertiser showing a chart that demonstrated the average cost of a shopping trip to nearby malls. A 46-mile round trip to Woodbury Common, for example, would cost $22.55. A visit to the Galleria would set you back $17.46. The idea was to encourage people to shop locally. And with the local price of regular grade gasoline now pegged around $3.20 per gallon, the argument has even more merit. Michael McDermott, owner of The Bookstore and one of the organizers of the Warwick Independence Alliance, argues that the cost of shopping on the Internet has also increased. “The shipping companies are adding a fuel surcharge,” he said, “and even if you are offered free shipping above a certain dollar amount, you can be sure the extra costs are somehow passed on to the consumer.” McDermott tries to remain competitive by restocking his shelves buying from nearby wholesale distributors to keep shipping costs low. “I think twice,” he said, “before ordering something from California that I can buy closer to home.” Obviously, businesses that must purchase fuel such as limousine services, landscaping companies and so forth are directly impacted. But every business can tie in the cost of fuel with whatever service they provide. “I’m paying more for food shipments today,” said George Antoniades, co-owner of G’s Restaurant. “But I’m not raising my prices because of a fuel surcharge. I’ll just have to eat it.” Some business owners worry that although Warwick residents may decide to do more of their shopping locally, the day-trippers and weekend visitors may stay home. Don Siegel, owner of Kokopelli, a Native American Gallery that specializes in Navajo and Hopi hand-crafted silver jewelry, disagrees. “There are not many shops in the entire Metropolitan area that carry this type of merchandise,” he said. “Many of my customers are collectors and they travel a long distance to see what’s new. And for most, the price of gas is not a big problem.” Terry Colman, owner of Ashford Bed & Breakfast on Oakland Avenue, also disagrees that fuel costs will hurt his business. “With all of the weddings and other events that we have in this area,” he said, “there hasn’t been any downturn. Also, we’re close to New York City and we’re in the heart of the Village. It’s much easier to drive here than taking a weekend trip to New England. You can even come here by bus.” Colman noted that his first business was actually a gas station. “In those days,” he recalled, “I sold regular grade for 29.9 cents per gallon. Then one day, the distributor told me that they were going to raise my cost by one cent. He suggested strongly, however, that I absorb the extra penny because no one would stop for gas if my sign read over 30 cents per gallon.” Realtors, whose out of pocket expenses include taking people out for what often turns out to be a sightseeing tour of the area, are both directly and indirectly affected. “The price of gas doesn’t bother the people who are interested in $800,00 homes,” said Anthony Portelli, an agent with Raynor Country Realty. “But we are seeing fewer shoppers for average priced homes. Just driving here or thinking about the cost of commuting could be a factor. However, when you consider the astronomical prices of homes that are closer to the city, moving to Warwick is still a good choice.” One solution often voiced is that everyone should drive smaller cars. “That may work in Europe,” said Leo Kaytes, CEO of Leo Kaytes Ford. “Gasoline is $5 per gallon there and almost everyone drives a small car. But as long as there are big cars and trucks on our roads, the customers who purchase a Ford Explorer or that type of vehicle are thinking more about the safety of their families in the event of an accident. And in this area they’re also thinking about utility and severe winter driving conditions.” Kaytes, however, did suggest that no matter what car you drive, taking it easy and keeping the vehicle well-serviced will get you the most miles per gallon. One type of business that most people assume would benefit from the high price of gas is a retail gas station. But according to Paul Leduc, owner of Warwick Car Wash and Oil Express, which is also home to a full service gas station, that’s not true. The retail profit is only a small percentage of the total price, he explained. The world market price of oil, refinery charges, transportation costs and taxes take up the biggest slices of the pie. The credit card companies, however, charge the retailer a hefty percentage of the total amount charged, not just the profit. “People are buying less and I’m sending more money to the credit card company,” he said. “Like everyone else, I’m not happy with the price of gas but we, at least, offer full service, not self service.” There may be some relief down the road. On May 22, USA Today reported that the high price of gas itself was driving down demand which, in turn, would drive down the price. Some consumers are even purchasing a few gallons at a time in the hope that the price will change for the better as distributors begin to see less demand on a daily basis. An agreement was also recently reached between the New York State Assembly and Senate that would cap state gasoline taxes at eight cents per gallon, until prices fall below $2 per gallon. Starting this June, the legislation would also allow counties to suspend their portion of local sales taxes above $2 per gallon.