June 26, 2008

Feeling Oil’s Trickle-Down Effect

By Christopher Boyd, The Orlando Sentinel, Fla.

Jun. 26--Have skyrocketing gas prices got you down? The same crude oil that is refined into fuel is also used to make plastics, fertilizers, roofing material and asphalt for roads. You might be surprised to see some of the many ways rising oil prices are affecting you.

Dry cleaning

Natural gas, which powers dryers at commercial laundries, is 36 percent more expensive than it was three months ago, said Romulo Gonzalez, owner of Perfection Cleaners on North Mills Avenue in Orlando. Chemicals used in the dry-cleaning process are up about 26 percent, he said. Though the company does pick up and drop off clothes to customers, it is paying its suppliers more for deliveries, and Gonzalez says the cost of hangers, plastic bags and electricity is also up sharply. But Gonzalez said he is reluctant to raise prices for fear that his customers will stop using commercial laundry services. "Right now, I see people wearing their clothes longer between cleanings and waiting extra days to pick them up," he said. "They are probably short of money for gas and food."


Rising transportation and the cost of fertilizer derived from natural gas and petroleum are putting pressure on landscaping products and services. Todd Brothers Inc., a foliage wholesaler in St. Cloud, has added $100 to $150 to every order it delivers to landscape installers. Todd, which hauls plants in large trucks from South Florida to the middle of the state, says the cost of plants has recently climbed 10 percent. Fuel costs have risen sharply. Diesel fuel for a tractor-trailer making a round trip to Miami has doubled this year.

Building materials

The cost of rebar, metal rods used to reinforce poured concrete walls, rose 23 percent during May alone as the cost of fuel used in production and transport to market increased. This month, the price of natural gas, a key ingredient in the production of polyvinyl chloride, hit its highest level since the post-Hurricane Katrina run-up in December 2005. That will soon be reflected in more expensive plastic pipe, vinyl siding, vinyl flooring and vinyl windows and other building essentials. The rising price of materials is expected to push up construction costs.


Progress Energy Florida and Florida Power & Light Co. both applied to the Florida Public Service Commission for substantial emergency-rate increases in the past month. Rising fuel costs are the culprit. Progress Energy wants an 8 percent increase, and FPL is asking for 16 percent. Those increases, which are extraordinary, would be temporary through the end of the year. But the big investor-owned utilities will probably make the case for 2009 increases when they make annual rate applications this fall. A jump in electricity rates hits consumers directly in their monthly power bills and indirectly as businesses add to the cost of goods and services to compensate for their higher bills.

Electrical contractors

The cost of wiring, electricity junction boxes and other products needed to wire buildings has risen 30 percent to 40 percent, according to Brite Electric Air Conditioning and Heating in Apopka. The rising cost of petroleum used to make plastics and increases in copper prices are behind the boosts. Fuel costs are another big factor: Suppliers that used to deliver parts for free now add fuel charges of $8 to $25 a trip, owner Judy Wolek said. Wolek said the construction downturn has brought fierce competition to contracting businesses, limiting the amount she can raise prices.

Christopher Boyd can be reached at [email protected] or 407-420-5723.


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