Americans are making lifestyle and spending changes to cope with high gas prices.
Melissa Santos - Herald Net - August 27, 2006
Trips to the coast are a high end luxury many cannot easily afford as gas prices rise.
After watching gas prices climb to $3-a-gallon and higher, Alan Rice decided it was time to make a change.
He'd already exchanged his motor home for a trailer to save on gas. But last month the Mukilteo resident went one step further: He traded in his sedan for a hybrid vehicle that improved his gas mileage by about 20 miles per gallon. As a result, he said he's saving about $180 a month at the pump.
More Americans are making lifestyle and spending changes to cope with high gas prices, according to an ACNielsen survey this month. More than two-thirds of consumers reported they are combining their shopping trips, and 39 percent said they're staying home more often to offset the cost of gas.
Many members of The Herald's Reader Network agreed.
"We have to make adjustments," said Don Purvis of Everett. "I try my best to not buy the gas at the current prices, but I just don't have a choice."
Other readers said they've begun doing their shopping on the way to or from work to reduce their driving.
"Our daily routine now consists of brief shopping trips on our way to or from other commitments," said Janet Koglin of Stanwood. "I'll pay higher prices for some grocery items knowing it would cost more gas to travel to a cheaper retail resource, or I'll compromise on brands I usually buy if the store I'm closest to has something acceptable in a different brand."
For many drivers, plans for vacation and leisure trips were the first things to change as gas prices increased.
Koglin said her husband stayed home from a family reunion this year because the two of them could not afford to drive their camper all the way to the Midwest.
"We're looking forward to going to the coast the last week of August," she said. "That's a much more modest trip than we usually take for a week of summer vacation."
Jake Ritland of Marysville said he and his wife have limited their local trips this year, hitting the road only once to drive to the Columbia Gorge.
The two of them are reducing their spending in every way they can in response to gas prices, he said.
"We have cut back on eating out, shopping and going to shows, games and movies," Ritland said. "It's not just the money for those expenses, but it is the idea of reducing our fuel usage."
Those living on a fixed income said higher gas prices have really strained their budgets.
Patricia Burke of Everett said the price increase has taken a great bite out of what she and her husband get from their Social Security checks. They have stopped taking drives together for fun.
"In the summertime we have always enjoyed a Sunday out: driving to enjoy the warm weather and just to enjoy each other," she said. "We have had to pretty much stop these drives because it costs more than $50 to fill our gas tank and we are unable to afford this very often."
Haulers pass on costs
Burke said she also suspects the cost of gas is increasing the prices of products she buys at the supermarket. To cover costs, companies such as John H. Kooy Trucking Inc. in Lynnwood have imposed fuel surcharges for deliveries.
"We've had to cut down on our groceries, the price of which is becoming prohibitive," Burke said. "I'm sure it's due to the increase in the price of fuel."
Small business owners have felt squeezed by high gas prices on multiple sides, said Snohomish resident Lisa Pingree, whose husband works as a specialty carpentry contractor. Higher gas prices cut into business owners' profits and restrict their personal spending, she said.
"The last couple of months the increase in gas costs had a major impact on our company income," Pingree said. "That has translated into less money to spend, and also made it much more costly to drive to our cabin on the Olympic Peninsula. This summer we stayed home more than we would have liked because of the loss of income due to increased gas prices."
Airlines try to save
Some industries, recognizing that high prices are here to stay, are working to make their operations more fuel-efficient.
When it comes to cutting fuel costs, little changes add up, said Brandon Pedersen, staff vice president of finance for Seattle-based Alaska Air Group Inc. A one-penny price increase for a gallon of fuel costs Alaska Airlines an additional $3.5 million a year, he said.
In response, airlines are implementing financial strategies and fleet upgrades to save money on fuel.
To lock in fuel prices before they fluctuate, Seattle-based Alaska Airlines engages in a practice called fuel hedging, which saved it $109 million in fuel costs in 2005.
Pedersen compared the practice, which involves buying fuel ahead at set prices, to buying insurance for a car. "You're glad when you have good insurance on your car, but you hope you never have to use it," he said.
As part of its upgrades, Alaska has updated about 30 of its jetliners with winglets, vertical or angled extensions of the wingtips that can reduce a plane's fuel consumption by 3 percent to 4 percent.
It has also invested in 100 Boeing 737-800s, which include winglets and are said to be 27 percent more fuel-efficient than the MD80s they will replace.
Changes are occurring inside the cabin as well. Just by reducing the weight of its beverage carts from 180 to 160 pounds, Alaska Airlines can save $450,000 in fuel costs a year, Pedersen said.
The airline has also removed Sky Mall catalogs from seat compartments to lighten the load.
"The weight of those magazines adds up," Pedersen said.
Farmers hit hard
Other businesses have fewer options when it comes to coping with fuel costs. Farmers, who rely on diesel-guzzling tractors and trucks, largely have to absorb fuel price increases. According to the United States Department of Agriculture, energy costs on farms went up 36 percent between 2004 and 2005, and are expected to rise another 12 percent by the end of this year.
Dairy farmers, who have been losing money for years because of lower milk prices, have been hit hard by the rise in fuel costs, said Tim Frohning, owner of Frohning Dairy in Monroe.
Frohning estimated his fuel costs have gone up 55 percent since 2002.
"We get it from all directions," he said. "Anything that comes in on a truck, we get a fuel surcharge. Our milk going out has a fuel surcharge on it also. And when I go to the grocery store, I pay it again, because it's added in the food chain."
To reduce his use of gas and diesel, Frohning pastures his cows using a method called intensive grazing, rotating them through different parts of the pasture so they keep the grass trimmed for him.
He also chops up corn stalks to make silage he can use to feed the cows in the winter, saving money on feed shipments. He estimated these measures reduce his fuel use by about 30 percent.
Jim Werkhoven, owner of Werkhoven Dairy in Monroe, said he's tried to save on fuel costs by planting Roundup Ready Corn, which is genetically engineered so that it produces its own herbicide. The corn reduces how often he has to pass over the fields with a tractor to fight weeds.
Unlike dairy and wholesale farmers, who have no choice but to sell their product at the market price, farmers who specialize in direct retail can more easily raise the prices of goods they sell themselves to make ends meet.
At Stocker Farms in Snohomish, Keith Stocker said he's upped the price of his produce by about 10 percent in response to the growing cost of fuel.
But keeping customers happy is just as important as maintaining profit levels, said Ben Krause, owner of The Farm in Snohomish. Instead of increasing his prices to cope with rising fuel costs, he's chosen to "eat it."
"You can maybe start to charge a little bit more at farmers markets or something like that, but if you do that too much people will just start going to the store," Krause said. "We don't want to add to our prices. We just want to make a living. If we can make a living, we're happy."
That's a consideration for bigger businesses, too. Even with all the changes Alaska Airlines is making, it is also being careful it doesn't remove amenities that will hurt customer satisfaction, Pedersen said.
"Some of the airlines have gone as far as taking the lemons off the beverage carts," he said. "We still have lemons."