Rising fuel prices drive locals to consider lifestyle changes

Rising fuel prices drive locals to consider lifestyle changes

Written by Amy Stansbury Thursday, 03 July 2008

Despite record fuel prices, Wag-A-Bag President Cary Rabb said the statistics he is seeing prove people are still buying almost as much gasoline as they did before prices began rising. However, diesel fuel sales are down slightly.

Rabb is expecting to see consumers change their buying habits when it comes to goods sold inside the stores. He said they will make purchasing decisions based more on price than ever before.

“We are anticipating customers to start buying down, meaning making the switch from top name brand to a cheaper, subgeneric alternative,” he said. “I believe we are finally at the breaking point where people will start changing their ways and buying patterns.”

Rabb said Wag-A-Bag will always carry name brand products because, despite the higher prices, many people would never buy cheaper, unknown alternatives. He would add generic alternatives to his product inventory though, to give customers options.

“Even with the slowdown, we are fortunate we are in a high-growth area because I read in industry publications about many mom-and-pop stores throughout the country who have stopped selling fuel because they can’t afford a $30,000 fuel delivery,” Rabb said.

According to Rabb, the cost of an 8,000-gallon tank of gasoline is $30,000, of which gas stations make little to no profit.

Business forced to raise prices

Sullivan’s Irrigation is a six-year-old family-run business based in Pflugerville. The company installs sprinkler systems in an area spanning from Georgetown, south to Buda and as far west as Spicewood. With nine installation trucks driving across such a broad region, Sullivan’s had to raise prices to pay for its fuel costs.

“We have probably seen a 5 percent increase in our fuel bill monthly, and the cost of our parts has increased, too,” said Monica Sullivan, co-owner of Sullivan’s Irrigation. “It is hard for us to remain competitive because of the fuel pricing that affects so many aspects of our business.”

Sullivan said she and her husband have had to assess their pricing and business strategy three times this year.

“We’re having to re-evaluate how we’re operating and how we’re bidding,” she said. “We’re not in business to gouge customers. We really want to price fairly. But it has been difficult because we want to remain competitive and still offer a good product and a good installation.”

Some customers who got estimates last year postponed installing a sprinkler system because it was a rainy year. They are surprised to see a higher estimate this year, Sullivan said.

“It’s a catch-22 because of the economy,” Sullivan said. “We’re facing dry yards from the lack of rain, but because of the price increases and the economy tightening pocketbooks and lowering household income, we’re finding that customers are being a little more conservative. For some, an irrigation system is a necessity and for others, it’s a luxury.”

Discount shoppers

The same thing could be said about most of the products sold at the Round Rock Premium Outlets. Assistant general manager Jana Griswold said they offer a nearby place for people to shop.

“We have not seen any slowdown in spending,” Griswold said. “In fact, we have seen an increase in foot traffic lately.”

One reason consumers may be spending their money at the Round Rock Premium Outlets is because of the lower prices.

“With gas prices and food and everything being more expensive, people are looking for better deals and discounts so they can save money where they can,” Griswold said. “Since we’re an outlet, we have 25 to 65 percent off every day. When times are tough and people are having to cut corners where they can, they’re coming here to find the discounts.”

Restaurant focuses on service

Christian Clanahan, general manager of the Chili’s at the northeast corner of IH 35 and Toll 45, said that his food costs are going up, but the company is not willing to compromise quality. Because it is a large corporation, it can get better prices on higher quality food than a smaller business usually can.

However, Chili’s does combat the fact that it is often cheaper for consumers to buy food at the grocery store and cook it at home than it is for them to eat at almost any restaurant. Although food quality and prices have always been important in attracting customers, Clanahan said that service is the key.

“Really, right now we’re just trying to impact the service,” he said. “People come in and they say, ‘I’m going to spend $30 on a meal — I better get wowed.’ It’s all about being hospitable right now.”

Clanahan said he appreciates when guests let him know about their experiences at his restaurant.

“Because of the fuel prices, it’s to the point now where just being hospitable is that important because it will change someone’s mind on $3.85 a gallon,” he said. “They’ll say, ‘I’m going to go to that place because they wowed me. Not just because of the cost or how great their food is, but because of the service.’”

Police department improves efficiency

The Pflugerville Police Department recently created districts for the officers to patrol so they are not driving as many miles.

“It keeps officers in a more confined area that allows them to pay a little more attention to what is going on in that area,” said Jim McLean, assistant chief of police. “It also cuts down on their driving, so it helps us cut down on gas.”

Even though the department planned for higher fuel costs when creating this year’s budget, the budget is depleted today because the price has risen significantly more than they expected, McLean said.

Buying flex-fuel cars is another way the department is trying to reduce costs. The department bought 10 flex-fuel cars last year and plans to buy 10 more in October, which is the beginning of its new fiscal year.

Flex-fuel vehicles can run on E85 fuel or regular gasoline. E85 fuel is a mixture of 85 percent ethanol and 15 percent gasoline, and it is cheaper than regular gasoline. However, police cannot fill up their cars with E85 fuel anywhere in Pflugerville. According to CleanFUEL USA, Central Texas only has three gas stations that offer E85 fuel: H-E-B at the corner of IH 35 and Parmer Lane in North Austin, another one at the Austin-Bergstrom International Airport and one in San Marcos.

Affordable vacations still available

Carl and Linda Anderson have owned Five Star Travel since 1991 and have been in business in Round Rock three years. Carl said that airlines are raising prices for flights, cutting back on-board services and charging for luggage because of the cost of fuel, but people are still traveling.

“We have not yet seen a significant slowdown in business; however, I think if the state of the economy continues much longer and fuel prices continue to rise, individuals and families will certainly change their buying habits,” said Carl. “We’re preparing for that.”

Carl said he steers clients toward vacation options such as all-inclusive resorts that have not been impacted greatly by fuel prices. All-inclusive vacations include hotel accommodations, meals, drinks, activities and gratuity, Carl said.

“If you’re going on a cruise ship you’re going to be hit with significant fuel charge surcharges,” he said. “Most have implemented them and they have increased now upwards of $70. But a lot of all-inclusive resorts have actually tried to reduce their costs. There have been incentives for vacationers to still travel.”

The Wag-A-Bag at the corner of Pflugerville Parkway and Heatherwilde Boulevard

Fuel Price Comparison

June 26, 2008: $3.89 unleaded, $4.58 diesel

June 26, 2007: $2.89 unleaded. $2.84 diesel

Source: Cary Rabb, Wag-A-Bag

Fuel Theft on the rise

Assistant Chief of Police Jim McLean said Pflugerville and nearby areas, such as Round Rock, Cedar Park and Austin, have seen a significant increase in the number of fuel thefts. He estimated that Pflugerville has experienced 65 to 70 percent more stolen gasoline by the fraudulent use of credit cards.

“They call it skimming credit card numbers,” McLean said. “They find a credit card number, and they have a machine to imprint that credit card number on a gift card. Then they take that gift card to the pump and fill up their car using the [stolen] credit card number imprinted on the gift card.”

Police are not sure how thieves are obtaining the credit card numbers, but they suspect a link to online shopping.

“Usually we see a connection to internet use and people using sites that are not secure, and somehow those credit card numbers wind up on the internet,” McLean said. “These guys can hack in and obtain that information. Then they start mass imprinting gift cards and just go to town on charging, mostly buying fuel.”

Fraudulent credit card use is a felony. McLean said he is working on a case right now that involves several hundred thousand dollars of fraudulent credit card use.

McLean advised people to protect themselves from credit card theft by being extremely cautious.

“They need to watch their credit history and credit reports by getting their free credit reports that by law they can obtain,” he said. “They also need to be careful about using their credit cards on the internet on an unsecured site. It needs to be a reputable website — not just arbitrarily purchasing things they find from stores that are not big names or maybe not even legitimate businesses.”

“They take that gift card to the pump and fill up their car using the [stolen] credit card number imprinted on the gift card.” — Jim McLean, Assistant Chief of Police, Pflugerville

Tips for optimal fuel efficiency

Low tire pressure is one of the leading causes of poor fuel efficiency, according to Frank Buzz, shop foreman at Covert Ford of Hutto. That is because more tire touches the ground, creating more resistance, which works the engine harder and in turn, burns more fuel, he said.

Rather than filling tires with regular air, some drivers are using nitrogen instead. Regular air is composed of mostly nitrogen, but it also includes oxygen, other gases and water vapor, which leak out of tires more easily. Oxygen can deteriorate the inside of a tire, creating opportunities for the air to leak out and shorten a tire’s lifespan.

Nitrogen molecules are much larger than those of regular air used for tires, Buzz said. Filling tires with nitrogen can keep tires at a relatively constant pressure.

“We have a nitrogen service for tires, and it’s becoming more and more of a real-world thing,” Buzz said. “It is used in a lot of aircraft tires and for all race cars, like NASCAR. More people are using nitrogen, the reason being that it doesn’t expand or contract with heat and it maintains a steady pressure.”

Buzz said it costs $40 to fill all four tires with nitrogen and if needed, customers can come back anytime within a year to get their tires refilled for free.

For those who use regular air for their tires, Buzz recommends checking the air pressure once a week to ensure optimal fuel efficiency.

Glossary

• Alternative fuel vehicles — These vehicles run on at least one alternative fuel. AFVs are available in a variety of models ranging from sedans, SUVs, pickup trucks and vans to heavy-duty buses and trucks.
• Electric vehicles — Fueled with electricity
• Flexible fuel (flex fuel) vehicles — Capable of operating on gasoline, E85, which is 85 percent ethanol and 15 percent gasoline, or a mixture of both
• Natural gas vehicles — Fueled with natural gas
• Propane vehicles — Fueled with propane
• Diesel vehicles — Today’s diesel vehicles are considered to be advanced fuel-efficient vehicles because they run on ultra-low sulfur diesel (ULSD), a clean burning fuel. Most diesel vehicles can run on biodiesel blends without engine modification.
• Advanced vehicles
  • Hybrid electric vehicles (hybrids) — Typically combine the internal combustion engine of a conventional vehicle with a battery and electric motor.
  • Plug-in hybrid electric vehicles — Plug into the electric grid and can be powered by the stored electricity alone. These engines enable greater driving range and battery recharging.
  • Fuel cell vehicles — Fueled with hydrogen

Source: U.S. Department of Energy, www.eere.energy.gov/afdc