Soaring Gas and Food Prices Hurt Wholesalers, Retailers
Motorists can expect prices at the pump to jump as dealers pass on a wholesale price spike caused by multiple refinery problems in the Midwest—a trickle-down affect that angers the retailers as much as the consumer.
“Our retailers make the same pennies on the gallon whether the gas costs $1 a gallon or $4,” said Ed Weglarz, VP of AFPD, a Michigan-based association representing more than 4,000 independent retailers including gas station owners. “When the gas prices spike that means the consumer has less money to spend inside the convenience stores often attached to the gas station because that is where the owner makes a profit. They do not make it on the gas.”
Weglarz explains that this is a significant problem.
In Michigan, the average price for regular is $3.82 per gallon comparing to the national average of $3.52, according to the AAA’s Fuel Gauge Report.
AFPD members want the public to understand that the independent retailers cannot control the gas prices and are at the mercy of the refineries like everyone else.
The gas price increases have a detrimental effect on business as well as the consumer. While you are paying more at the pump, retailers are also paying more at the grocery store.
As the drought that has affected two-thirds of the country continues, the cost of grain is surging because corn is becoming more expensive and it is all due to dry conditions.
The increase gas prices and drought translate to higher prices at the grocery store for just about everything.
“We not only see the price rise at the pump but the trickle down impact also has an impact on the cost to produce the items we are used to buying,” said Allan Girvin, director of sales and marketing for Heeren Brothers, wholesale distributor. “As fuel goes up at the pump it also goes up for the farmer for his fuel needs to produce, harvest and make ready to transport to market, a substantial cost even more so than the logistics from California to Michigan is the cost of fuel to grow and get to market the fresh items we are used to buying. Fuel costs have a substantial impact on the entire production to consumption formula with the pump price being just a part of the total impact.”
The price of fresh meats will increase as soon as this crop of protein is gone and the farmers aren’t left with much product—then they’re going to really raise the prices at the end of the summer. Buying Michigan products will help consumer save some money.
“In normal market conditions locally-grown products generally provide a savings to the consumer because of logistics. Less transportation time results in lower fuel surcharges added to the price and fresher products for the consumer,” said Mark Kassa, owner of Heartland Marketplace.
The Agriculture Department is reporting that grocery prices are expected to rise between 3 percent and 4 percent next year, which is slightly higher than normal.