Higher gas prices hitting
Gas prices have been steadily climbing for the last five months and affect all of us one way or another.
Even those who don’t have to drive to work -- and those who may not even own a car -- pay higher prices for food and goods because of the increased cost to manufacture and transport products to market.
David Perry, manager of the Southern Belle Truck Stop south of Berkeley Springs, said a gallon of regular gas cost about $2.88 last March. Between July and October, the price was as low as $2.68.
The American Automobile Association reported the average price for a gallon of regular gasoline in the Mid-Atlantic region, which includes our area, was $3.57 last week. Gas prices nationwide range between $2.62 and $4.68.
The Gallup polling service reports consumers across the country believe prices will reach an average of $4.36 this year. Hawaii is already the first state to report gas prices averaging over $4 per gallon.
The Wall Street Journal recently estimated prices at the pump go up roughly 25 cents for every $10 increase in the price of a barrel of oil, plus any incremental increases in state and federal taxes.
The price of a barrel of oil last July was just under $75. Today, the price hovers around $100.
Quick area tour
A drive down Main Street in Hancock, through Morgan County on U.S. 522 to the Virginia line and beyond to Winchester showed gas prices ranging from $3.46 to $3.60 last week, or roughly 25% more than last October.
In Hancock, most service stations displayed a price around $3.56 per gallon.
In West Virginia, nearly all gas stations had a per-gallon price of about $3.60.
In each, one or two stations had slightly lower prices. Prices also appeared to be lower along U.S. 522 in Virginia.
The main reason for price differences between states is the amount of state taxes on a gallon of gas.
Total state and federal taxes on a gallon of gasoline in January were 50.7 cents in Pennsylvania, 50.6 cents in West Virginia, 41.9 cents in Maryland and 37.9 cents in Virginia, according to the American Petroleum Institute.
At the Southern Belle, Perry said, “The higher it goes, the less money you make because of credit card charges.”
Credit card companies don’t charge by the gallon, but charge a set rate per dollar. The more gas costs, the bigger the payout to the credit card companies, he said.
Impact on businesses
Local businesses are weathering the storm so far, but the hit to their wallets from rising gas prices hurts.
“Transportation and freight costs impact us, but freight is a small enough part of our business that it is manageable,” said Gat Caperton of Capterton Furniture Works in Berkeley Springs.
The company pays fuel surcharges for freight on both raw materials coming in and finished products going out.
Caperton Furniture Works used to fill a 10,000-gallon oil tank to heat the facility at a cost of about $40,000 a tank full.
“We dramatically dropped our dependency on oil by installing a biomass boiler to heat the facility by burning scrap wood and sawdust,” Caperton said.
“Gas prices are going up as well as everything else,” said Dennis Schaffer of GHS Contracting. “It costs $300 to gas up a dump truck.”
But a more difficult problem for contractors is the lack of jobs.
“Contractors are taking jobs at low prices and sometimes at cost just to get the work,” he said.
Diesel prices are even higher than gas, ranging from $3.80 in Winchester to $4 per gallon in Warfordsburg, Pa.
“They are killing the little guy,” said Bill Shives of S&S Excavating and Hauling in Needmore, Pa.
Shives, who owns the business along with his son Matt, said the company spent $18,000 on diesel fuel for three dump trucks in December.
Food may be next
Food prices have not yet increased due to transportation costs, but prices are expected to increase later this year, according to management at the Food Lion in Berkeley Springs.
The U.S. Labor Department reported last Wednesday that food prices have risen faster this past month than at any time since 1974.
With the recent unrest in the Middle East and North Africa, it looks like prices for petroleum products will likely continue to rise.
Nationally, there are fears that the higher prices will cause a drag on the recovery from the recession.