Higher gas prices may raise delivery fees
Tuesday, February 28, 2012
Business owners say they don't like the idea of passing higher fuel costs on to their customers, but soon they may not have a choice.
Jackson Pizza Pro owner Dan Cook said right now he's able to absorb rising gas prices. But he's already making plans for what he will have to do if it hits $4 a gallon this summer as analysts are predicting.
The national average price of gasoline is at its highest ever for this time of year, at $3.69 Monday.
Local gas prices are about 10 cents lower than the national average, ranging from $3.49 to $3.59 per gallon, but still higher than the state average of $3.46 per gallon.
The average price in Missouri has jumped 12 cents per gallon in the last week and is up 28 cents from one year ago, according to AAA.
If gasoline gets to $4 a gallon, Cook said, he will raise his delivery fees.
"It's something you hate to do, but you have no option," Cook said.
He said he will continue to offer carry-out specials for customers who don't want to pay more for delivery. Currently his delivery charge is $1.75, and his drivers can travel up to 10 miles round-trip on one delivery.
Cook, who has owned Pizza Pro since 2007, said he first charged 75 cents for delivery but has increased the fee as gas prices continue to climb.
Joyce Kuntze, owner of Arrangements by Joyce in Cape Girardeau, said her flower shop used to get by with just a couple hundred dollars in its fuel budget each month. Now, she spends about $500 per month on gasoline.
She tries to deliver orders at the specific time her customers want, but she said that leads to a lot of trips around town each day.
"If gas continues to go up, we will probably have to curtail some of those special runs unless the customer is willing to pay an additional delivery fee," she said.
Greenhouses and wholesalers are already tacking fuel surcharges onto her orders, she said.
"It's all being passed on to me. I'm bearing that expense. I'm not raising my delivery fee yet, but I am still paying a much higher price at the end of the month," she said.
Reducing the number of trips they make is also what many local customers said they plan to do if gas prices continue to rise.
Pam Edmundson of Cape Girardeau, who was filling up at Huck's on Kingshighway on Monday, said she is OK with gas prices right now, but said she will change her driving habits if the price climbs much more.
"I will drive less and try to get everything done in one trip," she said.
Hershel Head of Cobden, Ill., who comes to Cape Girardeau regularly for medical appointments, filled up his tank Monday at R&P Oil on Bloomfield Road.
"We don't take trips like we used to," said Head, who said he bought his Toyota, which gets a fuel-efficient 40 miles per gallon, to save on gas.
Last week, Democratic Sen. Claire McCaskill of Missouri sent a letter to President Barack Obama urging him to immediately release oil from the nation's Strategic Petroleum Reserve to bring prices down.
Edmundson said she supports that move.
"If it brings prices down, I'm for that. Who wouldn't be?" she said.
Head doesn't believe it would affect prices.
"I don't think that would make two-cents-a-gallon difference," Head said. He does, however, support removing restrictions on domestic oil drilling and stopping the export of U.S. oil.
Dr. Bruce Domazlicky, director of the Center for Economic and Business Research at Southeast Missouri State University, said it would be premature to release oil reserves now.
"Since the stockpile could be quickly tapped, I think it more prudent to see how the market develops over the next few months before drawing on our reserves," he said. "The current price increases are not very welcome, but the economy should be able to absorb them for now without too much harm being done."
Uncertainty about oil production in Iran is the main reason for the rise in oil prices, he said.
"There is concern it might try to close the Strait of Hormuz, which could reduce the oil supply. Iran's economy is being hurt by sanctions, which could also make it difficult for it to maintain its oil production," Domazlicky said.
The Oil Price Information Service, an industry group, estimates the national average gasoline price could reach $4.25 a gallon at the end of April. That would surpass the previous record of $4.11 set in July 2008.
Missouri's highest record average price is $3.94 a gallon, set at the same time.
353 S. Kingshighway, Cape Girardeau, MO
2551 Bloomfield Road, Cape Girardeau, MO