Consumers, businesses keep eye on rising prices

MAT-SU — That rumbling around the Valley lately isn’t seismic activity, it’s coming from motorists filling up at the gasoline pump.

Like elsewhere across the United States, gasoline prices have increased over the past several months and predictions are for an expensive summer for gas guzzlers and motor vehicle recreation. Valley resident Ed Benson admits he grumbles about gas prices, but he still pays to fill up his pickup and snowmachines.

“It’s expensive and yeah, people complain, but it doesn’t stop you from doing what you’re going to do,” he said while filling up in Meadow Lakes Saturday on his way to Trapper Lake. “But, if you have a lower income, I could see it changing things. It’s gonna stop some people from running their motor homes and stuff like that. They’re going to have to sit there and say, ‘I can’t afford to drive to Homer.’”

As the state’s travel industry prepares for a summer of high gasoline prices, it’s everyday businesses and customers that will be most affected, said Alyssa Shanks, an economist with the state Department of Labor and Workforce Development.

High prices “affect us at the pump, but they also affect the cost of everything that has to be shipped here,” she said. “Because we are so far away, we feel it a little more. At least in Southcentral, our gasoline comes from Outside.”

So far, consumers don’t seem to be altering their spending, but that could change as prices rise higher, she said.

“I would suspect they would be doing all those things, including (making financial sacrifices), but it really depends on how high the gas prices go,” she said. “The slower the gas prices go up, the less we react. At what point are people really going to change their behavior? There’s got to be some point where some people will hit that limit.”

With gasoline prices in most places in the Valley at $4.01 a gallon for regular unleaded, as reported Friday by AAA, local prices are more than 12.5 percent more than the national average of $3.56. AAA’s Daily Fuel Gauge Report shows that national average is 26.6 percent higher than last year’s average of $2.81. For the Valley, prices here are 19.3 percent higher than a year ago, when a gallon of regular unleaded cost $3.36.

For Valley businesses, the math is simple, Shanks said. Because it costs more to ship products and supplies here, those expenses will be passed on to customers.

At Papa John’s pizza delivery in Wasilla, the high gas prices not only could result in higher pizza prices, it presents a staffing problem as well, said general manager Dan Justice. The restaurant has a flat $2 delivery fee per order, of which $1.25 goes to the driver for his or her gasoline. With a delivery area that spans from Vine to Trunk roads, that’s a lot of miles to cover.

“If they’re going eight or 10 miles one way and don’t get a tip, they could be looking at losing $3 in gas on that delivery,” he said. “Just the fact that gas prices are going up and it’s hard for them to take all those deliveries, it’s tough to make any money. Basically, if they’re doing 10 deliveries and only make $20 in tips, they’re putting all that money into gas and only working on just their wages.”

One of the misconceptions some customers have is that because there’s a $2 delivery fee, the driver gets all that money. Justice said he hopes gas doesn’t become prohibitively expensive to where delivery drivers quit.

“It could possibly lead to a loss of employees, my drivers mainly,” he said. “If we’re not going to be able to pay them any more, it’s just costing them more every night. We may have to charge more for our product, but that’s a decision for (the company’s) corporate office.”

Joan McIntosh owns Mongoose Trucking in Wasilla, a small operation with two trucks. Mongoose has no choice but to pass higher gasoline prices on to customers, she said.

“It’s terribly expensive,” she said, adding prices haven’t peaked yet. “I hate for the summer jobs to start, because it’s really going to be tough with prices going up and up.”

The last time gasoline prices saw a significant increase was in 2008, when then Gov. Sarah Palin subsidized residents $1,200 to alleviate the impact of high fuel prices. The state also initiated a study at that time into why prices in Alaska seem to be significantly higher than the Lower 48.

“The Attorney General’s office found no evidence of collusion or other illegal antitrust behavior among Alaska’s refiners, wholesale marketers or retailers to fix output or prices,” the study concludes. “Our investigation indicates that the spread between Alaska gasoline prices and prices in the Lower 48 markets that began to widen during July 2008 is likely the result of market-related conditions in Alaska, combined with the unprecedented price volatility and uncertainty that occurred in crude oil markets during the year.”

Some businesses are trying to make a silk purse out of gas prices. A sign outside a liquor store in Big Lake reads: “It’s official. Beer is now cheaper than gas, so drink, don’t drive.” Shoppers at Fred Meyer stores in Wasilla and Palmer earn discounts on gas purchased at the chain’s gas stations. The only one in the Mat-Su Valley is in Palmer. For every $100 spent, customers earn 10 cents per gallon off their next fill-up. The discount stacks up to $1 a gallon off.

Not everyone filling up in the Valley is grumbling, however. Jeff Suntken was cheerful and upbeat while filling his tank in Meadow Lakes Saturday.

“I’m a Sloper, I’m two and two (two weeks on, two weeks off),” he said. “To me, it’s worth it to see the high prices and know my work is secure on the Slope. The years I’ve made the most money up here are the years the gas prices were the highest. I’m no analyst or anything, but for me that’s how I look at it.”

Contact Greg Johnson at greg.johnson@frontiersman.com or 352-2269.