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STICKER SHOCK: Prices at pump soaring

Businesses try different ways to cover costs

Records fell across Nevada and the United States as fuel costs reached all-time highs Monday.

A gallon of regular unleaded gasoline averaged $3.20 in Las Vegas, as Nevada's average reached $3.26, travel club AAA reported. Reno's average came in at $3.39, and prices nationwide averaged $3.19.


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  • The higher gasoline prices are sending local businesses scrambling to cover the soaring costs with measures ranging from higher delivery fees to lower wages.

    At Big Traffic Mobile Billboards Worldwide, gasoline expenditures have jumped 9.5 percent since January, to about $7,000 a month, Chief Executive Officer Marla Letizia said.

    "Prices are the highest they've ever been, and it's taken us a little bit by surprise," said Letizia, whose company operates 11 light-duty diesel trucks that tow 200-square-foot billboards advertising casinos, condominium developers, Strip shows, car dealers and sandwich shops.

    "We're just taking it in the ankle," Letizia said. "You just have to deal with it."

    The company's clients probably would reject fuel surcharges, Letizia said, and Big Traffic is paring costs instead of upping transportation fees.

    The company is hiring part-time drivers to limit the overtime its employees can take. Letizia said she doesn't like the new policy -- the company offers overtime as a reward for its long-term workers -- but spring's fuel costs make the move necessary.

    If gasoline costs continue their upward march, Letizia will consider broaching fuel surcharges with her clients.

    Pricey gasoline could push up driving charges at Great American Cookies.

    Owner Michael Solomon increased delivery fees from $7 to $10 per trip just before the springtime spike in gasoline prices. If costs do not stabilize in the next month or so, he will weigh another boost, to about $12.50.

    The effects of expensive fuel have cascaded through Solomon's business, starting with a decline in foot traffic inside the local malls where Great American Cookies has outposts. Solomon first noticed the customer falloff in mid-April.

    "We may have a slow week from time to time, but we've had two and three and four weeks with slower business," said Solomon, whose stores are inside the Galleria at Sunset mall and the Las Vegas Outlet Center. "When Mother's Day came around and it wasn't so busy, that's when we really noticed. Mother's Day is a big holiday for malls, with a lot of traffic. But traffic was down."

    Thus, sales at Great American Cookies are off about 2 percent in 2007. And because the business is selling fewer baked goods, it's importing fewer raw materials for its products. The smaller freight load, with higher gasoline prices, has tacked on 20 percent to the company's trucking bill this spring, Solomon said.

    If business owners and their consumers are hoping for a break from higher costs, they will have to wait: Gasoline prices will rise a bit more before they level off after Memorial Day, experts said.

    Fuel costs set records Saturday, Sunday and Monday, and they could climb to new heights each day through Memorial Day, said Michael Geeser, a spokesman for AAA.

    Operational interruptions at the refineries that convert crude oil into gasoline are partly behind higher outlays at the pump, Geeser said. Some plants shuttered for seasonal maintenance stayed closed longer than refiners expected, as glitches emerged during servicing.

    "To boil it down, there's simply a problem with the refining infrastructure in this country," Geeser said. "It doesn't appear there is a problem with the oil supply. They just can't refine enough gasoline for American demand, and that's causing problems everywhere."

    Also pressuring prices: strong demand for fuel through the winter, said Denton Cinquegrana, West Coast markets editor for the Oil Price Information Service in New Jersey.

    Weekly demand for fuel in the United States was 1.9 percent higher in April than demand in the same month a year earlier, according to the federal Energy Information Administration, and total petroleum consumption rose 2.6 percent in the first quarter when compared with the first quarter of 2006.

    "This (price) rally has been brewing since January," Cinquegrana said.

    Cinquegrana and Geeser predict that prices will stabilize next week, once the Memorial Day spurt in fuel use eases. Plus, gasoline and oil imports into the United States will increase in coming weeks as overseas suppliers look to capitalize on the country's high fuel prices.

    Neither expert would predict sizable price declines: Geeser said the need for fuel is likely to stay strong through the summer, and Cinquegrana said the Las Vegas market is vulnerable to supply problems because it has just one pipeline delivering gasoline to the market.

    Both Letizia and Solomon said their businesses will thrive even if gasoline costs do not drop noticeably in the next few weeks.

    Big Traffic is 6 years old, so Letizia is a veteran at adjusting to summer jumps in fuel costs. Lower gasoline prices in the winter even out higher expenses in warmer months. And major gains in fuel costs have driven smaller competitors of Big Traffic out of business.

    "We'll weather this," Letizia said. "We've been in business far too long, and we understand how this all works. We've watched this occur every single year: Prices go up, then they go down. It's just a normal part of the cost of a commodity at this time of the year."

    Solomon is using new promotional efforts and old-fashioned patience to guide Great American Cookies through its sales dip.

    The company is making its samples bigger, luring consumers with smaller, intact cookies rather than small chunks of full-sized products. Great American Cookies converts 5 percent of a mall's traffic into customers, and Solomon hopes the upgraded samples will improve that rate to 7 percent.

    Solomon expects consumers will return to their spending habits after the sticker shock of higher fuel prices has worn off and after the country's supply kinks smooth out over the summer, steadying prices in coming months.

    Great American Cookies continues to do brisk business in specialty products, with sweets lovers still snapping up the company's $20 cookie cakes in solid numbers.

    "The bottom line for us is that higher gas prices just mean that we have to run our business more efficiently," Solomon said.

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    Report abuse

    JIM wrote on July 03, 2007 05:51 PM: VERY, VERY, VERY UN-PROFESSIONAL, AND GREEDY AS HECK FOR MARLA LETIZIA TO "STICK-IT" TO HER DRIVERS BECAUSE GAS PRICES GO UP, INSTEAD OF SHOULKDERING THE COSTS OF THE LOSS HERSELF - SOMEONE SHOULD REPORT HER TO THE NEVADA LABOR COMMISIONER !


    Report abuse

    David Huntington wrote on May 22, 2007 04:36 PM: Let's see, Great American Cookies is going to lower wages (by cutting back on overtime), raise prices (delivery charges and maybe the cost of a cookie) and the consumer is being gouged at the pumps cutting their expendable money. BUT, American Cookies expects to increase sales thru marketing efforts. Tell me Corporate America, if you keep gouging the consumer and holding wages down to the bare minimum, please explain to me how you plan on increasing sales? Who will be buying your product when the majority of Americans are at or close to the proverty level?


    Report abuse

    Colleen wrote on May 22, 2007 04:30 PM: If it will make you feel any better gas prices in Las Vegas are mucher lower than Michigan. We have been paying $3.49 and then it "lowered" to $3.35. Today it is $3.66! No Memorial Day driving for lots of people unless they are RICH!











    Report abuse

    Mike Babbitt wrote on May 22, 2007 03:16 PM: It is very important for us to be able to breath clean air. It is also very important for us to be able to enjoy life and be able to share in the fun things of life. IE: movies, dinner with the family at a restaurant,go bowling or
    go to the lake for some boating activities. All of a sudden it seems the only people who can enjoy these pleasures are the Rich. How can a company make record amounts of profit (BILLIONS) and tell the public it needs to charge more for it's product because they want to expand but not use their profits to re-invest in their own company? Why can they live way above easy street and the poor layman who performs the manual work has to find a way to survive the Oil Companies greediness? How is this calculated that the government lets it happen?
    Minimum wage was $3.50 when gas was $ .75, gas is now 425% higer, minimum wage has not kept that pace nor has blue collar workers wages kept that pace. Some one needs to pull the rains in on these companies.


    Report abuse

    Richard Molnar wrote on May 22, 2007 11:45 AM: Big Traffic Billboards trucks cause pollution and traffic congestion. If the price of fuel keeps going up, hopefully, they will go out of business.


    Report abuse

    Sep wrote on May 22, 2007 11:13 AM: JH

    If you can substantiate your assertions, please do.

    You won't, because you can't.

    We do this dance every summer as the peak driving season approaches. It baffles me that so many people appear to be so mystified by supply and demand.

    The enviro-nazis have seen to it that we haven’t built a single refinery in this country since the 70s. Our population has increased by 100 million since then.

    Hmm… 100 million more folks over the last 30 years, and no increase in refining capacity. Yep – it’s all Bush’s fault.

    You’d better polish your tinfoil hat. I understand it’s more effective with a good shine on it.


    Report abuse

    David Layland wrote on May 22, 2007 08:51 AM: Make hay while the sun shines. What the "experts" say is that at the current rate of consumption the planet can amply supply between 50 and 500 years of fuel. This begs the question of whether or not as a stock holder you would spare the cost of a new refinery or two.

    Do I believe that Green Piece is holding back the construction of new refineries? No. But I do believe that Big Oil wants me to believe that Green Piece can. I also believe that Big Oil is betting that there is more like 50 than 500 years on the supply side.


    Report abuse

    JH wrote on May 22, 2007 06:40 AM: First of all, Bush is an oil man. He naturally wants oil to go as high as possible. That makes him and his family weatlthier by the day, and he has the power to make that happen. Secondly, the American people need to get their head out of their rear end and have a real gas out day or week, preferably, a week. And that means don't go to work or use any gas PERIOD!! Of course in this day in age, Americans just need that instant gratification so badly that they will risk their lives and the lives of their children and grandchildren to have it. People just don't have the guts to stand up to the oil companies or the government any more. Remember the Boston Tea Party? Or do they even teach history in school nowadays. Come on people. Think. It is all about supply and demand. Economics that should be learned in junior high. We had better wake up before it is too late, and I am not sure it is not already too late.


    Report abuse

    alan berk wrote on May 22, 2007 06:34 AM: Well are all of you going to wake-up and stop this insane commuting

    if you don`t live within 15- 30 minutes of where you work i don`t have any sympathy for you!!!

    There are thousands of homes east of the strip and between sahara and sunset if you don`t live in that area gee- too bad!!!gee anyone living on Harmon from maryland parkway to boulder hi-way !

    mountains edge- blue diamond -the northwest -summerlin- how stupid can you get over priced and now costly to commute from!

    Well now it is time to pay for that stupidity!

    mass rapid transit

    efficient ways to move the people from the airport to the hotels

    oh well i don`t think people will ever get it!




    Report abuse

    jlfoutz wrote on May 22, 2007 05:57 AM: An oil refinery or two would certainly help, but no company will be allowed to build one without weathering a blizzard of lawsuits.


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