AP: Lower Gas Prices Offer Businesses Little Relief
TAMPA - In an economy hammered by job cuts and lost investments, there is something that has consumers feeling good again: Lower gasoline prices.
After enduring months of record high pump prices, motorists and businesses are paying about $1 a gallon less for fuel than they were over the summer. Pump prices in the Tampa Bay area are averaging $2.87 a gallon, down from a high of $4.01 on July 16, according to AAA.
But for some business owners, the sharp retreat in the cost of fuel hasn't done much to help the bottom line. In these tough economic times, wary consumers are hanging on to the savings created by lower pump prices.
"The down side is that no one is spending any money, still," said Brian Ferwerda, owner of Hudson Cleaners. "It's a catch-22 that we're in."
What's more, the cost of food and other items, which skyrocketed as gasoline prices surged to new highs, haven't declined. Even though gasoline prices have plunged, Ferwerda is still paying the same high prices for the supplies he needs to run his business.
Ferwerda has two delivery vans and it was costing him $78 to fill each one before prices began to fall. Now it's costing him about $65. The savings is nice, but it doesn't offset the profits lost from the drop in business.
"I'm probably going to close one of my stores," said Ferwerda, who has four locations in the Tampa Bay area. "I'm basically surviving on savings right now."
In the past month, the average price of regular unleaded has dropped 88 cents a gallon, or 23 percent, in the Tampa Bay area.
The lower prices stem primarily from a sharp decline in the cost of crude oil and decreased demand. Since July 11, when oil reached a high of $147.27 a barrel, oil has plunged more than 50 percent to about $71 a barrel.
But gasoline prices haven't fallen nearly as fast as the price of oil. During the same period, gasoline prices in the Tampa Bay area have fallen only 27 percent.
Given the bigger drop in oil prices, some motorists say the cost of gasoline should be much lower.
"Frankly, I thought they might come down a little quicker," Brad McCoy said as he filled his car with fuel at a South Tampa gas station. "I think the companies hold on to the higher prices as long as they can."
