Fuel prices up for holiday travel
Published 9:05 am Monday, September 1, 2003
By By Connie Nowlin Managing editor
As the Labor Day holiday approached, many families noticed that the fruit of their labors was not going as far as it had before.
The reason was something of an economic triple play, a triangle whammy of increasing gasoline and food prices and back-to-school expenses.
Some consumers have gotten used to higher fuel prices around the Labor Day weekend, but the current increases seem larger because the price had been stable for several months.
According to a Web site posted by the Energy Information Administration, prices had hovered around $1.50 per gallon from April until early August, when the price started to creep up. According to the same site, the cost to produce and deliver gasoline to consumers includes the cost of crude oil to refiners, refinery processing costs, marketing and distribution costs, and finally, the retail station costs and taxes. The prices paid by consumers at the pump reflect these costs, as well as the profits (and sometimes losses) of refiners, marketers, distributors and retail station owners.
The retail price fluctuation reflects seasonal demand for fuel, changes in the cost of crude oil, supply and demand imbalances, supply disruptions and competition in local markets.
In Atmore, some of that competition is Petroleum Engineers. Harvey White is the owner, and he is as much at the mercy of the suppliers as other consumers are.
At the end of July, gasoline was costing White 92.4 cent per gallon. To that he must add the cost of federal, state and local taxes – 37.9 cent per gallon, and freight of 2.5 cent per gallon. That fuel that he bought at the end of July cost roughly $1.32 going in to the pump. Consumers were charged about $1.42. From that 10 cents, White must pay his expenses, his help and insurance.
"It has been down as low as 4 cents a gallon," he said. "But it's hard enough to pay the bills off 10 cents a gallon. We're lucky to get that."
White said his suppliers price fuel to him every day. He was told that the blackout in the northeast had shut down a lot of refineries, and that caused the price to rise sharply.
The pike reflected the sudden short supply. When a refinery goes off line, White said, it is not easy to get back into production.
"You can't just flip a switch, it takes a week or 10 days to get it going again," he said.
Whatever the cause, it is still hitting residents in the pocketbook.
"We use what we have to have," said Sharon McGhee, a teacher at Escambia County Middle School.
She has a son at Faulkner State University in Bay Minette, and a daughter in Escambia County High School.
McGhee provides her son with one tank of gas a week and asks him to pay for the rest.
Back-to-school expenses were planned, though, so they did not have as much of an impact as they might have had.
And she has not noticed the change in the cost of food as of yet.
"I haven't noticed grocery prices headed up yet. My son didn't have to have any new clothes, but the gas just slipped up on us," she said.
"If it continues to go up, we'll have to do something, but you can't cut out school or work. We just make cuts in other places," McGhee said.
One of those places might be at the grocery store, but those prices are heading up, too.
According to the Alabama Farmers Federation monthly food price survey, the average cost of 20 basic market basket items was $40.02, up 12 cents from July, and up $2.57 from a year ago.
And while produce, including lettuce and tomatoes, fell in price, beef, dairy and poultry prices were all higher.
Regional reports collected by volunteer shoppers around the state Aug. 1-9 showed the market basket averaged $37.01 in northwest Alabama, $39.53 in the central counties, $40.98 in the northeast corner of the state and $41.42 in south Alabama. The regional shopper in Escambia County is Nell Booth.
She has been a volunteer shopper since the late 1980s and said that she doesn't think this blip in the economy is a trend.
"I think it regulates itself," she said. "Sometimes beef is up, but something else is down."
Booth had no answer as to why the basket would price out higher in southern Alabama than anywhere else in the state.
"It has always been the highest in south Alabama. You'd think prices would be the same at chain stores all over the state."