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Climbing Gas Prices Force Small Businesses to Conserve

Posted on: Saturday, 23 July 2005, 00:00 CDT

Jul. 22--Near record high gasoline prices are requiring some Orangeburg small business owners to search for ways to lessen the impact of rising fuel costs.

"Of course, when you run five or six vehicles, it impacts on us tremendously as it has for the past year," said David Garrison, owner of Automated Business Systems. "We incorporate (delivery) trips as much as we can."

Conservation measures for businesses are becoming the norm.

A select survey of Orangeburg service stations Wednesday morning, revealed that the least-expensive gasoline sold for $2.089 at three area service stations. The stations include: the Citgo at Junction of U.S. 601 and Old St. Matthews Road; Dodge's Store at U.S. 301 and Cannon Bridge Road; and Murphy U.S.A., North Road Plaza in front of Wal-Mart.

The gasoline prices are about 40 cents a gallon higher this time of year than last.

Garrison noted that conservation techniques, however, have little impact when prices are hitting the $2.18- to $2.20-range as has been experienced recently

"It does not take long before you have several $100 a month increase in expenses," Garrison said, noting that the company has to pay a fuel surcharge that tops delivery costs anywhere between $15 to $35. "In our business, we have no way of passing these prices on. When we quote a price, we have to abide by that price. It is something we just have to live with."

Orangeburg's Coca-Cola Bottling Co. runs 22 vehicles, uses about 150 gallons daily and spends about $300 on gasoline daily.

"We cut back everywhere we can," said Dwight Frierson, Orangeburg Coca-Cola vice president and general manager. "It has an impact on the bottom line. We drive everywhere we go."

Consolidating trips and handling several orders simultaneously are just a few of the ways the company is looking to save.

"We can't really afford to do anything different than what we are currently doing," Frierson said.

Murray Baroody Jr., president of Orangeburg Distributors Inc., an affiliate of Anheuser-Busch, said the company has looked at rerouting its transport trucks in an effort to cut back on mileage. Daily fuel costs are about $280.

"Variable costs are up," Baroody said, noting that beer prices in the last five years have also been low. This is in addition to the ongoing competition beer sales continue to see with lottery ticket sales. "We have had a flat, soft year. We are not recouping it (fuel costs) on the sale price of beer."

Garrison, Frierson and Baroody are not alone in feeling the pinch of fuel costs.

The latest International Profit Associates Small Business Research Board poll revealed that nearly 72 percent of the small businesses responding to the board's nationwide poll said they are feeling the impact of rising fuel costs.

This response is 64 percent higher than in a previous IPA SBRB poll which came out in April.

However, small business owners and managers remain split on whether to pass on the increase to their customers, with 49 percent saying they are passing on part or all of the increase and 51 percent indicating they are not, according to the poll.

IPA is the largest privately held provider of management consulting services to small- and medium-size businesses in North America.

Despite near-record-setting gasoline prices locally, Orangeburg gasoline prices and South Carolina gasoline prices remain among the lowest in the nation.

South Carolina gasoline is averaging $2.140 a gallon compared to the national average of $2.29 a gallon.

The state average is about 38.9 cents higher a gallon than this same time last year.

The average was a penny off the record high recorded the week ending July 8. Adjusting for inflation, retail gasoline prices peaked above $3 a gallon in 1981.

Pump prices were highest on the West Coast, averaging $2.50 a gallon. The least expensive was on the Gulf Coast, where motorists paid an average of $2.23 a gallon.

Crude oil futures closed moderately higher earlier this week, boosted by a combination of rising gasoline prices, expectations of lower inventories and the suspension of Mexican oil production in the Gulf of Mexico caused by Hurricane Emily.

Nearly 3 million barrels a day in Mexican oil production shut in for the third day, and gasoline futures rallied in anticipation of falling inventories.

Several refineries along the Gulf Coast experienced outages earlier this month as Tropical Storm Cindy caused power failures in Louisiana. The refineries have all returned to normal operations.

Hurricanes Dennis and Emily have had little, if any, impact on Gulf Coast refinery operations. Emily's greatest impact thus far has been on Mexican oil production.

Mexico was the top supplier of crude oil to the United States in May.

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Copyright (c) 2005, The Times and Democrat, Orangeburg, S.C.

Distributed by Knight Ridder/Tribune Business News.

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KO, BUD,

Source: The Times and Democrat, Orangeburg, South Carolina

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