High Gas Prices A New Low For Consumers

By Nancy K. Crevier

From one side of town to the other, gas prices are on the move and the only direction they are moving is up.

“Customers are mad about it again,” said Jay Patel, who owns the Mobile station on Church Hill Road along with Mukesh and Chand Patel. “A lot of customers understand, but a lot don’t and we become the frontline.”

He explained that as prices go up, their margin of profit actually goes down. “We hesitate to pass on our costs, because people are mad. We are laying out more, but our return is less.”

People have to buy gas to get around this rural town, said Chand Patel, but the business overall is affected by customers’ negative reactions to increasing gas prices. Said Mukesh Patel, “The first place we see a drop-off is in convenience store purchases.”

Mukesh and Chand Patel also own the Shell station on Church Hill Road, giving them twice the opportunity to see the cause and effect of high gas prices, as well as hear the wrath of customers on either side of the street.

At Buzz’s Mobil on South Main Street, where prices are slightly lower than the May 1 price of $3.09 posted for regular gas at Church Hill Mobil, employee Mike Verstegen still sees a lot of customers in a foul mood at the full-service station. “Most people are just disgusted. They want to know when the prices are going to stop going up.”

Station owner Gary Buzzanca has noticed that, “As prices go up, people shop around, so it affects business. People will drive elsewhere, even if it’s just two cents less a gallon. It makes them feel better.” Mr Buzzanca pays more for his gas because he buys directly from Mobil and pays eight to ten cents more per gallon than competing gas stations simply for being located in Newtown. Oil companies determine price zones for gas stations across the state. He is hoping that a bill presently before the legislature to revoke price zones will level the playing field.

“It would make [my station] more competitive,” he said. “Right now I am about six cents higher than Mobil gas stations in Danbury and five cents higher than Trumbull, two towns right next door. [Higher prices] definitely affect business.”

Steve Makowski, owner of The Roadrunner Kitchen next door to the South Main gas station, has seen a correlation between the high gas price and less business in his deli. “Customers will get a coffee maybe, but hold back on buying the sandwich they used to.” The dip in business was noticeable in the fall, he said, and again this spring. “When prices came down this winter, business improved.”

As of May 1, the price for regular gas at the Citgo on South Main Street hovered just below the $3 mark, and manager Jim Harrington thinks that the slightly lower price may have something to do with the station remaining consistently busy when other stations are feeling the pinch. While the gargantuan leaps in price last fall seemed to shock customers, this spring, he said, “The consumer is accepting to the fact that prices are very high.”

 Nor has this Citgo station’s convenience store been adversely affected. “If we have a busy day at the pumps, we are busy inside,” Mr Harrington said. “The extra $5 that went into the tank doesn’t go into the milk or juice they are going to buy today.”

 “What’s going to stop the increase in gas prices is when customers decrease their use,” said Nick Kopcik, who owns Nick’s Exxon on South Main Street. Right now, he is seeing customers hunting around for a bargain. “[The customers] know it’s not [the individual gas station owners] to blame. They are blaming the oil companies and the big profits they see them making.”

Profit is minimal for a small business, said Mr Kopcik. “You need volume to offset credit sales, for example. I’m working on a 4½ to 6 percent margin. When a customer uses plastic, that cuts into the margin quite a bit.”

Out of that small profit margin, he needs to not only pay for the gas that he buys, but for rent, employees, insurance, and all of the other costs of doing business.

“No one thing affects everything, but every little bit helps,” he said, and if the legislature were to get rid of price zoning, it would help somewhat. “Getting rid of the 13 cents a gallon gross receipts tax on gas would be a help,” he suggested. The gross receipts tax was originally implemented to create a fund to help station owners pay for the removal of defective underground tanks. “I think that fund is sort of in limbo right now,” he said, “and the money is just going into the state general fund. They should get rid of it.”

Arthur Hilario has owned Hilario’s Super Variety and Service Center for nearly 31 years. “Sometimes I don’t know what to think,” he said, concerning the record high price of gasoline. “People are cutting back,” he said. “People are a little bit strained by the price of everything. They save for the gas, there’s no two ways about it.” Whereas not so long ago a customer might have filled up their car and stopped in to purchase a sandwich, he said, many people now think twice before shelling out any extra money.

“They all bellyache [about the price of gas],” he said. His customers, at least, don’t place the blame on him, so far as he can tell. “They know it is about the oil prices.”

Are consumers interested in doing their part to reduce consumption? The Patels have not heard any of their customers express an interest in driving less or looking into more fuel-efficient vehicles. Granted, they say, Newtown is not particularly conducive to getting around without a vehicle, but they see little evidence that anyone is carpooling or cutting back on trips. “How many vehicles do we see come in every day with just one person? All of the time,” commented Jay Patel.

At Hilario’s, Mr Hilario said there has been little indication that consumers are carpooling or downsizing their vehicles. Instead, they just buy less gasoline at a time. Gary Buzzanca has not seen a lot to point toward customers carpooling, either, but two or three of his customers have recently purchased hybrid cars in hopes of cutting their gas consumption.

Nick Kopcik’s has had a few customers tell him that they are looking for more economical cars in recent weeks and a lot are asking him about hybrid cars, but they are in the minority. “The oil companies will keep squeezing us until we start a downward slope in use,” predicted this station owner, who has watched the trends for 13 years.

Rumors fly that before the summer of 2006 ends, drivers will be paying nearly $4 and possibly as much as $3.50 even before Memorial Day. It is hard to predict because so much depends on the geo-politics of the time, said the Patels, as to how much higher prices will go before this summer is over. Barrel prices reflect an added cost to hedge against the instability of world governments, they said, and if one country or the other becomes more unstable than it presently is, costs will soar further.

Generally, the opinion of people in the gas business is that consumers need to be proactive to protect themselves from the high cost of driving. “If you watch your pennies, your dollars will watch themselves,” advised Mr Kopcik.