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Gas-price noose tightening

Dilemma looms for consumers

If your back right pocket has felt a little lighter lately because of high gasoline prices, you're not alone.

As the squares atop the back-lit gas station signs change more quickly than a teenager's tastes, pocketbooks across the country have thinned out.

But the rising gasoline prices, which hit a record high Tuesday when the average price for a gallon of regular unleaded in Western Pennsylvania reached $2.028, will likely affect consumers in more places than at the pump.

Butler residents are feeling the pinch even more. According to the American Automobile Association, the average price for a gallon of gas in the city is slightly higher, at $2.036 per gallon.

The previous record of $2.021 was set May 25, when the price for a barrel of crude oil cost $37, the automobile association said.

Today, that cost hovers around $54 per barrel.

The increasing fuel costs are pinching everyone from trucking companies to schools and municipalities.

And, while the increasing costs have temporarily affected some businesses' bottom lines, others say the costs will eventually get passed to consumers.

Bill Scott, general manager of Nicholas Moving and Storage in Center Township, said the increasing gasoline prices have started to factor into his company's bottom line.

But because the Pennsylvania Public Utilities Commission oversees the moving industry, Scott said the increased costs must be shared between the company and the consumer.

Scott said customers pay no more than 25 percent of any fuel increase, with the company paying the other 75 percent of the increase.

But because Nicholas Moving and Storage is a smaller company, he said the increases have not yet become a major price influence.

"It hasn't affected us that harshly yet," he said.

Scott said the company has different fuel cards that give cash back at various truck stops, which helps slightly to defray the cost.

For Mack Purvis Jr., vice president of Purvis Brothers, Inc., a company that sells heating oil, kerosene, diesel fuel and other products, it's been difficult to gauge the effect of the rising gasoline prices.

Purvis said although heating oil is typically more expensive than unleaded gasoline, gas products tend to increase similarly as the cost of a barrel of crude oil increases.

At this point in the year, he said most customers are trying to conserve whatever oil they have left because of the rising prices and because of the arrival of spring.

But, it's not just the cost of the heating oil that affects Purvis. The company is a major consumer of diesel fuel for its trucks, which costs significantly more, he said.

"It's a major expense, and it's gone up a great deal," Purvis said.

So far, he said the company has tried to absorb much of the costs, but eventually, as they continue to rise, he said, the company will no longer be able to do so.

"Eventually it's passed on to the consumer," he said.

School districts also are at the mercy of OPEC, the Organization of Petroleum Exporting Countries, which controls the supply of crude oil.

Butler School District superintendent Ed Fink said while the district's school busing contract is not affected by the increasing gasoline prices, other aspects of the schools' operations are.

The district's food delivery trucks, which travel between the district's 14 schools, have started to feel the effects, Fink said.

Although they have not yet dug deep into the district's budget, increased fuel costs likely will be considered in next year's budget, Fink said.

The district has not been hurt by gasoline prices regarding its school buses because, under the district's contract with Valley Lines of Freeport, increased fuel costs are the responsibility of the bus company, Fink said.

In Cranberry Township, the township supervisors are starting to keep an eye on fuel prices, said township manager Jerry Andree.

He said the township, like every other municipality, budgets a certain amount of money for fuel. But if costs continue to rise and exceed what the township anticipated, the township will have to take action, he said.

"We're watching it very closely," he said. "If it exceeds what we were planning, we'll have to take if from somewhere else."

Andree said the higher prices might lead to the township reassessing what it buys and when. Just as some motorists will pass on buying a new pair of shoes, the township may have to pass on items such as new pieces of playground equipment.

"It's going to be felt in many ways," he said.

Even the township's roads could be affected.

The asphalt used on township roads is a petroleum-based product, Andree pointed out. So, as the price of crude oil increases, so will its effect on municipal road budgets.

Municipalities and school districts do, however, receive a tax break on gasoline that significantly lowers the cost of fuel.

Butler schools and other districts also receive another break. They bid out their gasoline purchases for three-year contracts, significantly reducing costs.

Not all industries are so lucky, however.

In farming, any rise in oil prices has a major impact on a farmer's bottom line.

Gary Hogg, a Slippery Rock area farmer, said recent rises in fuel prices have made a big impact on his operations.

Much of the equipment he uses, including tractors and trucks, use a significant amount of fuel. But so does fertilizer. Therefore, as gasoline prices go up, so does the cost of fertilizer, he said.

Also, Hogg must pay trucking costs to ship his harvests to companies or to brokers.

"When fuel prices go up, it really puts a hurting on us," he said.

He said that is because, while he has rising expenses for shipping his harvest, the going rate for his crops remains constant.

With gasoline prices expected to continue going up in the summer months, the problem facing motorists as they fill up their gasoline tanks may just be the beginning of a trend as the dilemmas facing Hogg, Purvis and other businesses begins to be passed on to consumers.

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