Fuel Costs Up Gas Price Drop Likely

By Scott Blake
South Florida gasoline prices, already the highest in the state, inched up this week to nearly a five-month high following a sharp increase this summer.

Analysts, however, say prices are starting to level and slight decreases could be on the way.

In addition to motorists getting socked at the pumps, this summer’s rising fuel prices have put a squeeze on many businesses, especially those in Miami-Dade County’s widespread transportation industries.

"Fuel costs are increasing," said David Ross, executive vice president of Miami-based Seafreight Line, which transports goods by truck and cargo vessel.

"Diesel fuel prices [for trucks] have gone up and bunker fuel prices [for ships], after prices came down early this year, are climbing again," Mr. Ross said.

The average price Tuesday for regular unleaded gas in Florida was $3.791 a gallon, up about 16 cents a gallon from a month ago and about 45 cents a gallon since July 1, according to the AAA Daily Fuel Gauge Report.

Gas prices in South Florida are higher, averaging $3.930 a gallon for regular unleaded in the West Palm Beach-Boca Raton area — tops in the state — followed closely by Miami with an average of $3.925 a gallon.

Diesel fuel prices are even higher, averaging $4.077 a gallon in Florida and $4.125 a gallon in Miami.

Mr. Ross said higher fuel prices translate into increased operating costs for his company, which mainly trucks food and non-perishable goods, such electronics and auto parts, into Florida to be exported on ships to other countries.

As a result, he said, his company usually passes the extra cost to its customers, who usually pass the extra cost to their customers. Eventually, he added, consumers end up paying more as a result.

In the end, Mr. Ross said, his company and shipping firms often suffer because the higher prices that consumers pay for goods eventually suppress demand for consumer goods.

In addition, he said, volatile fuel prices have made budgeting for operating costs more difficult for businesses, largely because fuel prices "are all over the place… There’s no predicting it anymore."

Mr. Ross said business at his company is still doing "relatively well," because many of his customers are overseas, including several in key markets in Central and South America, where demand has not slumped as much as it has in the US.

"For now," he added, "they’re hanging on."

Although fuel prices in Florida and elsewhere have surged since July 1, prices are still well below all-time highs set four years ago.

Miami’s all-time high for regular unleaded was $4.162 a gallon in July 2008. The record high was diesel fuel in Miami was $4.933 a gallon, also in July 2008, according to AAA’s fuel report.

AAA expects fuel prices to stabilize in the near future. For the first time in 10 weeks, the national weekly average for regular unleaded did not increase.

Some states in the Southeast, including Georgia and Tennessee, have started to see prices at the pump drop, but others such as Florida are just showing some leveling of prices.

As demand starts to taper off with the end of the summer driving season and refinery production resumes along the Gulf of Mexico following Hurricane Isaac, prices could start to drop, according to AAA.

For past four weeks, oil prices have traded between $96 and $97 a barrel, providing some stability that also could lower prices at the pumps, AAA said.

"The good news is gas prices are starting to fall as expected now that the summer driving season has come to an end and refineries prepare for production of the winter blend fuel," said Jessica Brady, a spokeswoman for AAA Auto Club South.

"While gas prices aren’t expected to drop substantially during the next couple of weeks," she said, "motorists should start to see more stability and slight decreases at the pump."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.