Gas crunch starts ripple effect

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREThe top 10 theme park moments of 2019 Even as gasoline prices have slipped a bit from their summer highs, it’s clear the $3 mark is the new norm – prices are nearly $1 above last year and double what they were at the end of 2002. Experts explain the forces at work: record-high crude prices, increased demand, stagnant supply and refining capacity, and reduced production brought on by fires and hurricanes. But grumbling consumers don’t want to hear any of that. “It’s a vicious cycle upward, upward, upward,” said Irwin Sussman, 65, a retired contractor living on Social Security in North Hollywood. “It’s less money to spend on necessities. If you have an extra $20 to $40 a month, when you’re on a fixed income, it’s a lot of money. Record-breaking gas prices are changing the way Southern Californians live – pinching budgets, rearranging commutes and having a ripple effect across the economy. The $3-a-gallon price at the pump is one shock, but price tags on just about every service and commodity imaginable, from delivery charges to construction materials, home heating to family recreation, are changing as well – and none for the better. Not even the oil crisis of a generation ago hit families’ pocketbooks as hard, said Allen Martin, director of the Consumer Resource Center at California State University, Northridge. “This has cut across the board. Virtually anyone who drives is facing this,” Martin said. “We’ve never seen a 100 percent increase in fuel prices over a short period of time. Salaries are not increasing at the rate the gas prices are increasing. That means you have to spend less or save less.” “It means maybe I won’t go to a movie, won’t go here, won’t got there, maybe won’t take my grandson out for a hamburger.” Gas has shot up nearly $1 a gallon since last year, 50 percent, leaving Southern Californians to carpool, take the smaller family car over the SUV and think twice about running errands. Many, Martin suspects, may be slow to see just how big of a bite it’s taking out of budgets because they put gas purchases on credit cards. But for the working poor – one in seven families countywide lives below the poverty level – the crunch is often all too obvious. Fifty-seven percent of respondents in a Public Policy Institute of California poll released last week said increases in gas prices had already caused financial hardship. But the pain doesn’t stop at the pump. From canned goods on store shelves to pizzas delivered to homes, consumer items are bound to have price spikes as transportation costs increase. “We’re going to see this ripple through the economy as we see the manufacturers pay more for their fuel, the wholesalers as they pay more to get the products into their warehouses and the retailers,” said Daniel R. Blake, a professor of economics and director of the San Fernando Valley Economic Research Center at CSUN. “This is a general price increase, it’s across the board and it’s going to show up in our pocketbooks,” he said. “Not just in our price for fuel, but everywhere.” Florist Moshe Ninio – who’s already started carpooling with his wife to their Kirk’s Flowers shop in Van Nuys – is tacking an extra $1 delivery charge on local orders. “We definitely make less than before. I just look at it per day. If it’s 5 to 10 bucks, it’s something I can still afford. I don’t want to look at the big picture. If it’s a year, I lose $1,000, I’ll pass out.” Restaurateur Michael Puetz, who owns Henri’s in Canoga Park and Oxnard, sees the ripple across his balance sheets. He’s facing $25 extra delivery charges from the rental companies he relies on to bring tables and chairs to events he caters, some of which he’s passing on to his clients. But since gas has hovered at around $3, business has been down about 25 percent at his original Canoga Park eatery. “The week the kids go to school always seems to be off, but it always kicks back up in the next few days. I haven’t seen that.” Many commuters are talking about hybrids, and experts believe consumers will start demanding more efficient wheels, much the way Japanese imports became mainstream after the oil crises of the 1970s and early 1980s. Ford Motor Co., one of the nation’s biggest automakers, is betting its future on it, rolling out half its line in hybrid form by 2010. Still, Paul M. Ong, Director of the Ralph and Goldy Lewis Center for Regional Policy Studies at the University of California, Los Angeles, warns making big changes in living, working and driving takes time – and is only likely if prices continue to soar. “People respond in a very temporary fashion. If the high prices prove to be temporary, I don’t think we’ll make the changes we need in the long run. People have very short memories.” Sussman, the retiree, says he could cut down on the one fill-up a week for his 1983 Mercedes, but isn’t planning on it. “I could stay home and not go out of my house. I don’t have to go to McDonald’s. That’s the situation. I don’t want to be pretty much living in the sanitarium next week,” he said. “The gas expense is a major thing today. It’s a problem.”—Staff writers Brent Hopkins and Rachel Uranga contributed to this report. Lisa Mascaro, (818) 713-3761 [email protected] local news?Sign up for the Localist and stay informed Something went wrong. 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