The Idaho Statesman
Eric Graff is a delivery driver at Flying Pie Pizzaria
except on the days that he rolls balls of pizza dough. It´s
pretty outrageous, he says about the price of gas. It
gets harder and harder, but there´s nothing I can do
about it. He gets paid by the hour, plus $1.13 per trip,
which is OK unless the delivery is a long way away. Plus
tips, that helps.
Treasure Valley motorists aren´t the only ones suffering
through the recent surge in petroleum prices.
Area businesses say the decision by the Organization of Petroleum
Exporting Countries (OPEC) to scale back oil production by
an additional 4 percent is going to do more than just drive
local gasoline costs to historic levels.
Just about everything that comes to the Treasure Valley is
brought here by truck, and much of what we buy is made from
petrochemicals that cost more when the price of oil goes up.
Experts already see gas prices ricocheting throughout the
public and private sectors, driving up the cost of services
and products, curbing consumer spending and threatening employment
gains in Idaho.
As companies have to absorb these higher energy costs,
it could diminish that (job growth) momentum, says Wells
Fargo economist Kelly Matthews. Combined with the impact
on consumers, that could put a damper on the recovery.
Things don´t figure to get any better.
At week´s end (April 2, 3), Idaho´s average price
in the daily American Automobile Association survey was fifth-highest
in the nation at $1.83 a gallon for regular unleaded. Boise´s
average price slipped to $1.83.8 from a record $1.84.5 earlier
in the week.
So far, pump prices have not affected the price of a pizza
at two Flying Pie Pizzarias in Boise, or what the company
charges for delivery. But that doesn´t mean it won´t
happen, said owner Howard Olivier, adding that the suppliers
of ingredients have added freight surcharges to their contracts
in recent years to cover fuel expenses.
If diesel fuel reaches $2 a gallon (it sells for about $1.81
now), his supplier will add $1.50 to the bill for each delivery.
If gas prices continue to climb, easing the financial strain
on his drivers without boosting pizza prices could mean hiking
the $1.50 delivery charge. Olivier worries that could be a
risky strategy if consumers balk at the higher fee.
We could either raise our delivery charge or stop offering
delivery, Olivier said. There comes a point beyond
which I can´t make magic.
Elsewhere, it´s costing Action Couriers $1,800 a month
more, or almost $12,000 a month, to keep a fleet of 32 vehicles
on the road.
A 6 percent fuel surcharge to customers has eased some of
the pain. But with even higher gas prices expected this summer,
layoffs among the company´s 48 employees are a possibility,
says owner Mike McGrath, who doesn´t think his customers
would stand any additional charges.
Our profits have dropped, and we´re potentially
looking at $2-a-gallon prices, McGrath said. At
that point, we would have to make changes structurally. There´s
no way we could continue to operate at those prices.
The Boise School District also is taking a beating on fuel
costs. The district contracts for 130 school buses to ferry
about 6,500 students to and from school each day. It pays
$188 per day per route to the bus company, Laidlaw Education
Services. However, the contract stipulates that if the price
of diesel fuel increases more than 5 cents beyond a certain
point, the district has to reimburse the contractor.
From Feb. 1 to March 4, diesel went from 55 cents a gallon
to $1.14 a gallon. That added $56,000 to the cost of providing
bus service. It´s money that will have to come out of
the district´s budget, says transportation supervisor
As the cost of petrochemicals has increased, so has the price
of petroleum-based carpeting and vinyl flooring. Manufacturers
have hiked the cost of their products three times this year,
with increases ranging from 8 to 18 percent, says Discount
Carpets owner Kay Hamilton.
This industry is heavily reliant on petroleum,
said Hamilton, who purchased extra inventory to stay ahead
of price increases. I tried not to put it on the customer,
but now I don´t have a choice. I´m almost out
of all that stuff, and customers are starting to freak.
The cost of her vinyl flooring also has gone through the
roof. Most recently, the cost for one of Hamilton´s
popular Aurora vinyl flooring went from $9.31 a square yard
to $10.45, an increase of $1.14 for a product that in the
past saw increases in pennies, she said.
Taxi drivers also are feeling the impact of rising gasoline
prices. Cabbies are independent contractors who lease their
vehicles from the companies and must return them at the end
of each shift with a full tank of gas. Cab rates are set by
the city of Boise, and drivers must buy the gas with the money
they make on fares.
And we don´t make that much money driving a cab,
said Mike Murphy, a transplanted New Yorker who pays Boise
City Taxi $77 a day. There are days when you´re
going to lose money, because this (price of gas) is just cutting
too deep into our pockets.
Murphy blames the Boise City Council for not authorizing
an increase in the $2.20 charge each time a driver drops the
flag, or the subsequent $1.90 per-mile charge.
Even higher gasoline prices are apparently in the offing.
Charlie Jones, co-owner of 45 Stinker gas stations in Idaho,
including 22 in the Treasure Valley, said Sinclair, his supplier,
has warned him to brace for $2 a gallon by summer.
The morning after OPEC´s announcement, the wholesale
price retailers pay for their gasoline increased as much as
3 cents a gallon, Jones said.
It´s not the retailer who´s making a zillion
dollars, Jones said. It used to be that for our
wholesale price to move upward 1 cent a gallon in a week was
a lot. Now it´s not uncommon for it to move up 3 cents
to 7 cents overnight.
One immediate concern as summer approaches is the effect higher
gasoline prices will have on tourism, a $2.2 billion industry
that attracts 21.5 million vacationers to Idaho each year.
Ironically, sky-high gasoline costs may actually help tourism
by convincing state residents to vacation closer to home,
and residents of neighboring states to put off any long-distance
travel in favor of just going camping in Idaho,
said Carl Wilgus, administrator of the Idaho Division of Tourism
Boise resident Erica Irminger says her family will put off
a trip to Salt Lake City this summer because of the price