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Gas Hits $2.85 in Grand Forks, N.D.

Posted on: Wednesday, 31 August 2005, 18:00 CDT

Aug. 31--Gas prices took another leap Tuesday, up 25 cents from Monday.

Most Grand Forks stations were selling regular unleaded for $2.85, with premium gasoline prices at $3 a gallon at some stations.

Pushing local prices nationwide was the potential damage to oil platforms, refineries and pipelines that remain closed along the Gulf Coast as Hurricane Katrina moved inland. Crude futures briefly topped $70 a barrel Tuesday, and wholesale gasoline costs surged to levels that could lead to $3 a gallon at the pump in some markets.

Flooding from Katrina likely caused enough damage to some refineries that it could take weeks, or possibly a month or more, for operations to return to normal, analysts said.

Local businesses the Herald spoke with Tuesday say they haven't seen customers tightening belts yet -- people still are hitting the road to do their daily routine. And most business managers say it is hard to judge activity with thousands of UND students back in town this week. Still, many expect to pay the piper eventually.

"We were busier today than we were yesterday, and yesterday was busy," said Terry Anderson, manager at the Green Mill said Tuesday.

Chris Demaster, manager of Subway restaurant, said he hasn't seen a dip in customers either, but did say that he thinks those hit hardest by higher gas prices are those who live in surrounding areas.

The number of customers isn't businesses' only concern - their costs, too, are affected by fuel prices. So far, managers say they haven't seen a large cost increase. Suppliers who serve Leevers Super Market have adjusted their fuel surcharge, although not significantly, manager Roger Voeller said.

Businesses do acknowledge that the higher cost of fuel has to be paid for somehow.

Shelly Duchscherer, the owner of East Grand Floral, said the increased costs that businesses and the government agencies are facing have to come from somewhere. "It's a circle, everybody has to pay for it," she said.

She said she hasn't changed her delivery prices recently but did up them a little when the price of gas first started rising. The shop's suppliers haven't increased their charges recently, either, although that could change. Soon, the shop may have to take another look at its delivery rates, she said.

But those who may be hit hardest are delivery drivers, one manager said.

James Simundson, the manager at Pizza Hut Delivery, said drivers are noticing the effects of higher fuel prices because they get a base reimbursement for each delivery they take and a gas reimbursement that varies with the cost of fuel.

Government departments with a lot of vehicles and machinery also are growing concerned as fuel budgets get squeezed. So far, prices aren't high enough to warrant cutting services.

At the Grand Forks Public Works Department, which runs the street sweepers and buses, director Todd Feland said he's anticipating going over this year's budget. The department is trying to work more efficiently, he said, and has not had to reduce service levels, "yet."

"That's the last option," he said.

There may be a need to adjust next year's budget, though.

Typically, when the department needs fuel, it calls around to different suppliers to get the best deal but does not hedge the market, according to Feland. If prices were expected to go up, the department would fill its tanks sooner.

That, though, can backfire. This week, it seemed everybody was filling up early. Suppliers were so backlogged they had trucks lining up outside the Williams terminal on Gateway Drive and delivery time rose from a day to up to two days.

Across the river, East Grand Forks has had to revise its proposed 2006 budget due to fuel costs. It calls for $124,000 for fuel and lube, but this year the city already has spent $137,000, according to finance chief Wayne Oberg.

The Associated Press contributed to this report.

By Lisa Davis and Tu-Uyen Tran

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To see more of the Grand Forks Herald, or to subscribe to the newspaper, go to http://www.grandforks.com.

Copyright (c) 2005, Grand Forks Herald, N.D.

Distributed by Knight Ridder/Tribune Business News.

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YUM,

Source: Grand Forks Herald (Grand Forks, N.D.)

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