Industries hurt by rising gas prices
Published 12:00 am Thursday, March 24, 2005
Recent fuel hikes are not just hurting consumers at the pump. It seems the record number reached in fuel prices could affect shoppers in all aspects.
Rising gas prices tend to filter into other categories and cause the price of most every product to rise. This is especially evident in the farming industry where shipping by truck is an integral part of getting the product to market.
Unfortunately, the rising cost of gas is expected to trigger increased costs in inbound freight and outbound shipping that will make things more difficult for farmers.
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Pat Philen, who works in sales for Linden Lumber Company, said gas prices definitely have an effect on the lumber market.
“It always does have an effect because when the price of fuel goes up naturally, the price of shipping will go up.” Philen said. “That is something that filters all the way down to the consumer.”
Philen said the rising prices could handicap some industries because it gives sales to the closest competitor.
“It can definitely hurt because it makes it more difficult to be competitive,” Philen said.
“A lot of time when fuel becomes more expensive the closest competitor gets the sales.”
The main problem occurs in the calculation of shipping costs. The costs added into freight go up with fuel prices. These costs are not just based on the rate for fuel, but on the entire cost of shipping. If gas prices rise 20 percent the entire cost of shipping can go up 20 percent.
Philen said this affects everyone because every product is shipped by truck in one way or another.
“Everything that we used is hauled by a truck,” Philen said. “It doesn’t matter what the product is or how it gets here in the first place it is hauled by a truck. If it comes in the railroad or on a boat it eventually ends up on a truck.”
The same principals apply in the beef and catfish industry as well. Both must ship their products for sale and both pay dearly because of rising gas prices.
Robert Koehn, office manager of Clear Water Catfish in Gainesville, said the impact has not been felt yet, but the possibility is there.
“Well, at this point we don’t know,” Koehn said. “It could affect us. The market has shown no support for an increase in the prices of catfish because of increased fuel prices yet, but they might.”
Rising fuel costs also put a dent in consumer spending which is another problem for farmers and retailers. A lower demand would mean an increase in prices to make up the difference in a normal field. However, since most prices are already as much as most consumers are willing to pay this is often not an option. Many times the only alternative is to leave prices the same and lose margin.