High gasoline prices contribute to postage stamp rate increases

WASHINGTON -- Gasoline prices that have millions of Americans digging deeper into their pockets are spurring thoughts by Postal Service officials that an increase in mail rates may be needed in 2007, following one already planned for next year.

The fact that it costs the mail agency $8 million for every penny increase in gasoline prices for its 212,000 vehicles is a major factor in a postal rate increase expected in 2007, after one next year, Postmaster General John Potter said Friday.

A 2-cent increase in stamp prices scheduled to take place in 2006 will merely cover the cost of legally required escrow payments, so growing costs overall will force a second boost a year later, Potter said Friday.

"Our costs are going up just like everybody else's costs," Potter said. The amount of the 2007 postage increase will depend on the economy, the cost of gasoline and other factors.

"The Postal Service last raised rates in July 2002," said Potter. "The only reason that we're raising rates 5.4 percent (in 2006) is to create sufficient funds to pay the $3.1 billion that's required in the law." The January increase would raise the price of a first-class stamp to 39 cents.

Unless changed by Congress, the escrow requirement would increase in subsequent years, he said.

The Postal Service's chief financial officer, Richard Strasser, predicted that even with the rate increase in January the Postal Service would finish 2006 some $1.8 billion in the red.

The escrow requirement was imposed by Congress when it permitted changes in the agency's pension funding. A bill that would ease that requirement has passed the House but not the Senate, and postal officials have raised questions about other provisions in the bill that could affect postal operations.

Potter also said the post office was forwarding mail to some 400,000 people displaced by Hurricane Katrina and was urging others who have relocated to let the agency know where they are.

Fill out a change of address form "every time you move and the mail will follow you," Potter said. Post offices were set up at relocation centers such as the Houston Astrodome and in other cities where evacuated people were being sheltered.

Sharon Cheneau, 50, a social worker from New Orleans, stayed at the Astrodome for several days before a relative in Houston took her in. She said she received no mail at the makeshift post office at the Astrodome, but once she filled out a forwarding address for her relative's house she began to receive mail consistently until Hurricane Rita began to brew, interfering with the mail anew.

"Hopefully, it will get better now," she said.

Only an "insignificant" amount of mail was lost in the storm because items were relocated to upper levels of post offices or diverted to Houston, Potter said, "We got the mail out of harm's way."

The Postal Service has set up mobile offices to deliver Social Security and pension checks to people in the region and is gradually re-establishing service in the affected area, Potter said.

On other topics the postmaster general said:

--Biodetection systems are being installed in postal plants across the country and will be completed by the end of the year. Developed after the anthrax attacks in 2001, the systems can test for up to 10 biohazards at once.

--Many transactions that used to require a trip to the post office -- buying postage and labels, arranging pickup, changing address -- now can be done by phone or on the Internet.

--The holiday season is changing. In years past, catalogs went through the mail in September and October, people placed orders in November and the big holiday mail flow was between Thanksgiving and Christmas. Now advertising is increasing in November as sellers and buyers realize late orders can still be delivered by the holidays. Christmas cards used to be mailed over a full month; now it's the two weeks before Christmas.

--Mailers such as insurance companies, banks and utilities can purchase special codes to place on their envelopes, allowing the items to be tracked through the postal system. A company using such a code can check to see if the check really is in the mail.