Peak Oil News: Strapped commuters seek fuel bargains

Thursday, July 28, 2005

Strapped commuters seek fuel bargains

Philadelphia Daily News


THE MOTHER of nine, Stacy Moore of Hunting Park drives a big car - a Nissan Quest mini-van - with a big fuel tank. She also has a big commute between her two jobs - one in Northeast Philadelphia and the other in South Jersey - so it's important to her to buy gas in the Garden State, where it's cheaper than in her neighborhood.

Very important.

"I will drive on 'E' to get here," said the 37-year-old Philadelphian, as an attendant gave her $20 worth - only half a tank - at the Wawa gas station on Route 73, a mile or so east of the Tacony-Palmyra Bridge. One day last week, a majority of the customers at the pumps in Pennsauken were from Pennsylvania, lured by prices of $2.229 a gallon, or 18 cents less than the Philly average.

It's fairly common for motorists to drive out of their way to find the lowest gas prices, but Moore is also typical in that she hasn't made any major change in the number of miles she drives each week. She can't quit her jobs, although she conceded she's been less generous in offering rides to family members.

Experts say that high gasoline prices could ultimately reshape the Philadelphia economy - forcing more commuters onto mass transit and more development at rail and subway stops, crimping the city's surging airline traffic, and causing economic pain for small businesses.

Average Philadelphia prices hit an all-time high last week of $2.42 per gallon for regular unleaded gasoline. This week, the average is only a penny lower at $2.41 - but major changes in the economy or even in everyday driving habits seem a long way away.

Like a millionaire baseball owner who's willing to spend $200 million and break the bank to win a World Series, Americans' spending on their automobiles defies any economic logic of supply and demand. This May, when prices were in the midst of their record runup, U.S. gasoline consumption was actually 1 percent higher than in May 2004.

The result of sky-high gas prices, so far, has been nothing like the long lines and consumer panic of the 1973-74 Arab oil embargo, or the crushing recession when prices hit their inflation-adjusted records in 1979-81.

This time around, adjustments have been minor. Small businesses have been passing along price increases when they can. Individuals are trying to drive less, although they say that's hard when most driving is for work and family activities. They talk of buying a more fuel-efficient car when the one they drive now gives out.

Drivers are angry, but not filled with rage - not yet.

"It makes me really mad," said Anne Martella, a 38-year-old Philadelphia bartender, as the Wawa attendant pumped $23 of gas into her Cutlass Supreme. "But I can't change my habits - you've got to do what you've got to do."

In May, 66 percent of drivers who took an on-line survey for the Progressive Group of Insurance Companies said they would change their driving habits at $2.40 a gallon - the level that Philadelphia is at right now. The number jumps to 78 percent at $3 a gallon, which is a price point at which some experts think drivers really would cut back - instead of just talking about it.

Likewise, a statewide Issue PA/Pew Poll showed 72 percent of motorists shopping for cheaper gas and majorities saying

they've cut back on driving a bit and have seriously considered buying a car with better gas mileage. But while 29 percent of Philadelphia poll respondents claimed they are taking mass transit more, SEPTA officials have not seen any increase in the number of passengers.

Richard Maloney, the spokesman for the transit agency, said that based on past experience, it would take at least three or four months of sustained record gas prices for a noticeable rise in commuters taking rail or buses.

"History has told us that we really don't see a spike - or just see a small spike - until a number of months after an event," said Maloney, noting that a switch from commuting by car to mass transit is a major lifestyle change.

Joel Naroff, the chief economist for Commerce Bank, said that many consumers simply try to absorb the extra $10-$20 a week they've been spending on gasoline, although over time there will be an impact of all the dollars taken from the economy.

"The people who are hurt are low or middle income people who have to drive to work and can't escape it," Naroff added. "It's essentially money out of their pocket that they can't spend on anything else. They're just sucking it up."

Likewise, within the business community, the pain has not been spread equally.

The higher oil prices have begun to take a serious toll on the nation's airlines. But unusual market conditions here in Philadelphia have analysts saying there will not be a major crimp in the surge in traffic that started 14 months ago with the local arrival of Southwest Airlines.

"Philadelphia is in pretty good shape right now," said James Corridore, an airline industry analyst for Standard & Poor's Corp. He said that Southwest's reliance on long-term fuel contracts has insulated it from price shocks, while rival US Airways is looking at a $1 billion infusion of cash in its pending merger with America West.

Not in as good shape: Small businesses such as pizza delivery restaurants and general contractors.

Bob Petril, a manager at the ever-busy City Pizza at 16th and Oregon in South Philadelphia, said that while higher gas costs for its delivery drivers is one problem, customers don't realize that fuel costs are making his raw supplies more expensive, too.

"It's kind of like the snowball effect," he said. Like small business owners, Petril said he's had to pass some of the price increases onto customers, and absorb the rest.

"We try not to make too many unneeded trips," said Ray Smith, a radio tower repairman out of Sounderton. "It used to be that if we forgot a piece of steel, we would just run back to get it."

As Smith spoke at the Pennsauken service station, an attendant pumped $19 - half a tank - into his tailer-hauling GMC truck. Smith ran after him, saying: "Hey, I want the other half!"

The bad news is that some experts believe that $19 for a half a tank of gas may look pretty good some day.

In the short run, some experts believe that major geopolitical disruptions to the oil supply - such as a terrorist attack in Saudi Arabia, the world's largest producer - could cause an unprecedented spike.

Last month, a group called Securing America's Future Energy and the National Commission on Energy Policy sponsored an oil "war game" with former top government officials, and a six-month series of mock disruptions drove oil to $120 a barrel - double the current price - and a gallon of gas to $5.30.

Depressing as that may sound, there is a growing group of energy experts who also believe that the earth is approaching what they call "Peak Oil' - the time when the world's use of oil exceeds what it can produce - faster than expected.

The most pessimistic energy experts - including several widely respected ones - believe that Peak Oil could come by the end of this decade, especially if the demand for fuel from a booming Asian economy continues to remain high.

Even the more optimistic reports from the federal government say that Peak Oil - with its threat of massive global upheavals - could come by mid-century, when a child born today would be just 45.

Still, some are not worried. William Klotsas, a 74-year-old retired engineer from Andorra getting his tank filled in New Jersey, recalled paying 10.9 cents a gallon during a corner price war in the 1950s.

Have rising pump prices affected him over the years?

"I still live poorly," he quipped.


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