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Local Businesses Feel The Heat As Gas Prices Climb

This article is more than 12 years old.

The enduring crisis in Japan and lasting hostilities in Libya are driving up prices at the pump in Massachusetts. And while the impact here is nothing like the tragedies abroad, it’s still worrisome. The price of gasoline has climbed 35 cents over the last month, and almost 90 cents since September.

For self-serve, regular gasoline (Data from AAA Southern New England)
CLICK TO ENLARGE: For self-serve, regular gasoline (Data from AAA Southern New England)

Diesel prices have hiked up even more.

Some businesses are increasingly worried, but so far they are not noticing any big changes in customer behavior.

Gus Martucci definitely watches gas prices. The burly owner of Mutual Beef Co. works out of a boxy building in Roxbury, where you walk past the truck loading dock to get to the front door. Inside, a dozen workers wear white coats and hats.

As Martucci’s workers slice up slabs of meat, a machine slaps ground beef into stacks of patties. All this meat will end up as burgers in college dives, or as pastrami in downtown delis.

Martucci is charging more for those deliveries because the meat is trucked in from the Midwest. And since diesel prices are $1 more than they were a year ago, Martucci’s paying more.

"You know, if it’s a couple of pennies, 3 or 4 cents a pound, usually you absorb it, somewhere, somehow," Martucci said. "When it gets into the dimes, in the 20 cents, you have to pass it on."

The recent climb in fuel prices is inopportune. Last summer, Mutual Beef Co. hired two more workers and bought additional trucks to be able to make more deliveries.

"We didn’t plan at that time for gas to be four bucks a gallon," Martucci said.

So far, though, business is holding up.

It’s the same story with independent trucker Angelo Paoletty, who’s topping off his tractor trailer at the Lee Service Plaza on the MassPike in western Massachusetts. Paoletty charges his clients a surcharge that floats daily with price of diesel.

"If I had to pay $4.01 a gallon like I just did, on a load like this, I would lose $85-90, just to work," he said. "It gets passed on to the consumer. Not all of it, but enough to where I can turn a profit."

"The short-term impact of higher oil prices is not that big on businesses," said Greg Daco, an economist at IHS Global Insight in Lexington. Daco said consumers are taking notice of the higher prices business are charging recently, but they’re still paying up.

"However, if prices stay at a higher level for a sustained period of time, then you start seeing an impact on the real economy," he said.

The potential is there. It depends on what happens in Libya. It depends on how Japan recovers. It depends on a lot of things. But the good news is there’s still time for gas prices to come back down to avoid a noticeable drag on the Massachusetts economy.

This program aired on March 21, 2011.

Curt Nickisch Business & Technology Reporter
Curt Nickisch was formerly WBUR's business and technology reporter.



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