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Businesses feel gas price pinch

But costs won't deter deliveries

POSTED: March 2, 2013 12:17 a.m.
Jim Dean/

Bob Euton gets ready to make a delivery Monday for Lakeside Pharmacy in Cumming. Local businesses haven’t made any changes to their delivery services despite higher prices at the pumps.

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For Apollon Constantinides, high gas prices just have to be absorbed.

The owner of Lakeside Pharmacy, inside Northside Hospital-Forsyth’s 1505 Building, said the business’ medicine delivery service doesn’t stop even when fuel costs rise, as they have in recent weeks.

“In our business, we have free delivery so I’m going to have free delivery whether it’s $10 a gallon or 50 cents a gallon,” he said. “It really doesn’t affect me.”

Lakeside Pharmacy has seven full-time drivers who use company-owned vehicles to deliver medicines to any customer who wants the service.

The drivers deliver all day Monday-Friday, said Constantinides, adding that the service is free — the drivers don’t accept tips — and that won’t change.

“If we started charging people, it would kind of kill our whole business model,” he said. “What we do is five minutes or less when you’re in the pharmacy or it’s brought to your home for free. There’s no tipping, no charge, no nothing.”

Fortunately for Nick Holder, a delivery driver with Sidney’s Pizza Parlor in Vickery Village, he does get tips.

The West Forsyth High School senior said the recent high gas prices, which this week were about $3.80 a gallon for regular unleaded at some locations in the county, have hit hard.

“It was like 40 bucks to fill up my car and now it’s like $50, $55, so it’s crazy,” he said. “It definitely impacts what I make because most of my pay check goes to gas anyway.”

The bad news for Holder, 18, and pretty much everyone else is that relief from high gas prices doesn’t seem to be on the horizon.

According to information from AAA, the current national average for a gallon of regular unleaded is $3.63, eight cents more than it was this time last year.

At least four states have seen prices at or above $4 a gallon. In Georgia, the current average is $3.76, while it was just $3.63 last year and $3.32 a month ago.

Despite the prices at the pump, AAA reported that crude oil prices earlier this week were about $93 a barrel.

Anna Rulska-Kuthy, an assistant professor of political science at the University of North Georgia, said that while crude oil barrel prices below $100 usually signal lower prices at the pump, that’s not the only factor.

“The whole idea of what comprises the prices for oil, or especially what goes into the gas pumps, it’s a very complicated process,” she said. “The barrel [cost] is probably only about 55 to 60 percent of what determines the price.”

She said other factors can include the time of the year — summer blends cost more than winter blends, for example. Also, she said, oil refineries typically undergo maintenance in early spring, which is probably contributing to the current trend.

“What you see right now is scheduled maintenance of oil refineries and unfortunately the U.S. refineries are in really bad shape,” she said. “You have to take into account just the bad shape of the refineries.”

Also, she said, how clean or dirty crude oil is has to be taken into account.

“In December, we actually had a bout of relatively clean oil, whereas right now we’re having a bout of dirtier oil, which is also driving up those prices,” she said, noting that all crude oil regardless of its origin at times is just dirtier and more difficult to process.

“Whether it’s Canada, the U.S. or the Middle East, there are going to be bouts of cleaner and more prepared for use crude oil, and sometimes it’s just simply dirtier.”

Other gas price factors can include social and political turmoil.

“What you have now is anxiety about the stability of the dollar given what is happening right now with the congress,” she said. “What you see in the international market is the speculation of whether the dollar is going to stay strong, what is going to happen to it.”

Rulska-Kuthy predicted that prices likely will continue to rise for the next few weeks, but she doesn’t think they will reach $4 a gallon for regular unleaded in Georgia.

“I think we’ll stabilize probably right around $3.80 for a little while and it will start going down … in March or April,” she said. “And then once the summer months roll around and they’re going to have to prepare the oil again for the temperatures on top of the travel season, it’s going to go up again.”

Fortunately for Holder, the pizza delivery driver, the West Forsyth community is made up of good tippers.

“People do tip pretty well around here,” he said. “The past couple of weeks, I have been getting better tips, so maybe they feel sorry for us.”

As for Constantinides, his medicine delivery vehicles will keep rolling along.

“This is just what we do,” he said. “So if gas prices do go way down, yeah, we might make a little more money. But if they go way up, we’re just going to make less. Our job stays the same.”

 

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