>>
Gary: JUST AHEAD ON "NEED TO KNOW," YOU MAY BE TIRED OF PAYING
MORE AT THE PUMP, BUT AREA SMALL BUSINESSES ARE FEELING THE
SQUEEZE EVEN MORE. JOIN YOU AS WE LOOK AT HOW RISING GAS PRICES
ARE FORCING LOCAL COMPANIES TO CHANGE HOW THEY DO BUSINESS.
PLUS WE'LL OFFER ADVICE ON WHERE YOU CAN FIND THE CHEAPEST GAS
AND HOW TO SAVE A LITTLE. IT'S COMING UP NEXT ON "NEED TO KNOW."
(Music)
>>
IT'S ONE OF THOSE THINGS WHERE YOU KNOW YOU HAVE TO TIGHTEN
YOUR BELT WHILE THE SITUATION IS PREVALENT.
>>
THIS IS "NEED TO KNOW," THE ROCHESTER AREA'S ONLY IN-DEPTH NEWS
PROGRAM. "NEED TO KNOW" IS A PRODUCTION OF WXXI NEWS AND PUBLIC
AFFAIRS COVERING ISSUES, POLITICS, EDUCATION AND CURRENT EVENTS.
>>
"NEED TO KNOW" IS MADE POSSIBLE BY THE DAISY MARQUIS JONES FOUNDATION,
BY DORSCHEL LEXUS, AND THROUGH THE SUPPORT OF VIEWERS LIKE YOU.
>> Gary: THANK YOU FOR JOINING US. I'M GARY WALKER. WHETHER
YOU'RE PLANNING A FAMILY VACATION THIS SUMMER OR WATCHING THE
COMPANY BOTTOM LINE, RISING GASOLINE PRICES ARE A CONCERN FOR
JUST ABOUT EVERYBODY. TRIPLE-A REPORTS THE AVERAGE COST OF A
GALLON OF GAS IN ROCHESTER IS NOW $1.71. JUST TWO YEARS AGO,
THAT PRICE WAS $1.10. ADDING TO THE EXPENSE ARE HIDDEN TAXES
FACTORED INTO EACH GALLON OF GAS AND ZONE PRICING PRACTICES
THAT LEAVE CONSUMERS WONDERING WHERE TO FIND THE BEST DEAL.
AREA SMALL BUSINESS ARE ALSO TAKING A HIT, FROM DELIVERY SERVICES
TO YOUR COMPANY SALES TEAM OUT ON THE ROAD, HIGH GAS PRICES
ARE FORCING LOCAL COMPANIES TO FIND WAYS TO BE MORE EFFICIENT
IN THEIR TRAVEL. TRIPLE-A IS CALLING ON STATE AND FEDERAL GOVERNMENT
OFFICIALS TO TAKE ACTION TO CURB PRICES, INCLUDING THE ADOPTION
OF A NATIONAL ENERGY POLICY AND THE REPEAL OF GASOLINE-RELATED
TAXES. NOW WITH BUDGETS THAT WORK CLOSER TO THE RED LINE THAN
THEIR BIG COMPANY BROTHERS DO, AREA SMALL COMPANIES HAVE LESS
ROOM TO ABSORB INCREASED EXPENSES. A 60-CENT RISE IN GASOLINE
PRICES OVER THE PAST TWO YEARS IS EXACTLY THE KIND OF EXPENSE
THAT PLACES AN ADDED BURDEN ON SMALL COMPANIES. "NEED TO KNOW'S"
MATT CUMMINGS SPENT SOME TIME WITH A LOCAL COMPANY TRYING TO
SURVIVE.
>>
Matt: MEMORIAL DAY MARKED THE UNOFFICIAL START OF SUMMER, AND
ONCE AGAIN CONSUMERS ARE FEELING THE EFFECTS OF HIGH GAS PRICES;
BUT THIS SUMMER THEY AREN'T THE ONLY ONES.
>>
WITH PRICES RISING FROM SLIGHTLY OVER $1.10 OR SO JUST -- SEEMS
TO BE JUST MONTHS AGO, UP TO $1.70-SOMETHING NOW, IT'S ACTUALLY
HAD A VERY DEFINITE IMPACT AND A VERY NEGATIVE IMPACT ON US.
>>
Matt: RAY SHORTINO IS C.E.O. OF RADEC CORPORATION, A LOCAL COMMERCIAL
INDUSTRIAL ELECTRICAL CONTRACTING COMPANY THAT EMPLOYS ABOUT
100 PEOPLE. HIS COMPANY USES A FLEET OF 30 TRUCKS TO PROVIDE
SERVICES FROM WIRING FIXTURES TO DELIVERING ELECTRICAL SUPPLIES
TO CONSTRUCTION SITES. SHORTINO HAS DONE THE MATH AND KNOWS
JUST HOW MUCH RISING GAS PRICES HAVE HURT HIS COMPANY.
>>
IF WE TAKE AN AVERAGE OF ALL 30 VEHICLES, WE FIND THAT WE AVERAGE
ABOUT 35 GALLONS PER WEEK PER VEHICLE. THAT'S ABOUT A FILL-UP
AND A HALF EVERY WEEK. THE COST FOR OUR COMPANY, FOR JUST THE
INCREASE, IS WELL IN EXCESS OF $30,000 A YEAR.
>>
Matt: SHORTINO'S BUSINESS IS BASED ON BIDDING WITH OTHER CONTRACTORS
FOR CONSTRUCTION CONTRACTS. HE FACTORS IN THE COST OF GAS IN
HIS BIDS TO COMPANIES BUT SAYS IT'S GETTING MORE AND MORE DIFFICULT
TO REMAIN COMPETITIVE AND SAYS HE'LL SOON HAVE TO PASS THE ADDED
EXPENSE ON TO HIS CUSTOMERS.
>>
THAT'S ABOUT TO HAPPEN. FORTUNATELY, OVER THE PAST YEAR, CONSTRUCTION
HAS BEEN BOOMING. WE HAVE NOT HAD A PROBLEM PUTTING THAT COST
INTO OUR BIDS AND PASSING IT ON. AT THIS POINT, HOWEVER, WE
ARE STARTING TO SEE A SLOWING DOWN OF THE ECONOMY, TIGHTENING
OF CONSTRUCTION BUILDINGS, MARGINS ARE BEING SQUEEZED, AND WE'RE
NOT GOING TO BE ABLE TO PASS IT ON AND, QUITE FRANKLY, I'M NOT
SURE WHAT WE'RE GOING TO DO WITH IT.
>> Matt: SHORTINO'S CUSTOMERS MAY SOON FEEL THE PINCH, BUT NOT
BEFORE HIS EMPLOYEES DO.
>>
WE ARE A PROFIT-SHARING COMPANY AND, THE WAY WE OPERATE, ALL
EXPENSES OBVIOUSLY HAVE TO BE PAID BEFORE ANY PROFITS CAN BE
SHARED. GAS PRICES HAVE GONE UP TO AN EXTENT THAT THEY'RE IMPACTING
OUR PROFITS AND, THEREFORE, IMPACTING PROFIT SHARING. THIS YEAR'S
PROFIT-SHARING DOLLARS WERE DEFINITELY LESS DUE TO THE GAS SHORTAGE.
>>
Matt: DAVE RICE IS A DRIVER FOR RADEC. HE UNDERSTANDS WHAT RADEC
NEEDS TO DO TO REMAIN COMPETITIVE.
>>
WE DO HAVE TO WATCH OVERHEAD IN THIS BUSINESS WHERE IT'S A BIG
BUSINESS AND COSTS HAVE TO BE CONTROLLED AS BEST AS POSSIBLE.
>> Matt: BEYOND CONCERNS FOR RADEC, RICE SAYS HE AND HIS FELLOW
DRIVERS HAVE A MORE PERSONAL CONCERN.
>>
THEY DO WORRY ABOUT THE FACT THAT THEIR JOBS COULD BE IN JEOPARDY
WITH COSTS GOING UP AS FAST AS THEY ARE. I THINK WE ALL HAVE
TO CONSIDER THAT.
>> Matt: IS THAT AN IMMEDIATE CONCERN OR DO YOU THINK THAT'S
KIND OF DOWN THE ROAD A BIT?
>>
DOWN THE ROAD, BUT I THINK IT'S IN THE BACK OF EVERYBODY'S HEAD
BECAUSE, YOU KNOW, AS WELL AS THE GAS BEING OVERHEAD, SO ARE
WE, YOU KNOW; AND GAS, YOU HAVE TO HAVE. ADJUSTMENTS COULD BE
MADE OTHERWISE.
>>
Matt: SHORTINO SAYS HIGHER PRICES FOR GAS IS CREATING A DOMINO
EFFECT FOR HIS COMPANY.
>>
IT'S DEFINITELY GOING TO HAMPER EXPANSION. IF WE'RE SPENDING
MORE MONEY ON FUEL, IT MEANS WE CAN'T SPEND MORE MONEY ON OTHER
THINGS THAT COULD ACTUALLY INCREASE PRODUCTIVITY, LIKE COMPUTER
EQUIPMENT, ANY TYPE OF NEW TECHNOLOGY. ANYTHING AT ALL THAT
COULD INCREASE PRODUCTIVITY IS GOING TO HAVE TO TAKE A SECOND
SEAT NOW TO HIGHER GAS PRICES. IN SOME CASES, THAT MEANS, FOR
SOME OF OUR MEMBERS, NOT TRAVELLING AS FAR TO DO PROJECTS, WHICH
IN TURN WILL MEAN LESS PEOPLE BIDDING PROJECTS, WHICH AGAIN
IN TURN WILL MEAN HIGHER PRICES.
>>
Matt: ADDING TO THE EXPENSE FOR SMALL BUSINESSES LIKE SHORTINO'S
IS THE HIDDEN COST OF TAXES CHARGED PER GALLON OF GAS. MOST
GAS STATIONS DON'T READILY PUBLICIZE THE LOCAL, STATE AND FEDERAL
TAXES THEY'RE REQUIRED TO CHARGE. WE FOUND ONE STATION THAT
DOES. CONSUMERS CURRENTLY PAY ABOUT 50 CENTS IN TAXES PER GALLON
OF GAS, AND THAT DOESN'T SIT WELL WITH SHORTINO.
>>
REDUCING THE TAX OR ELIMINATING THE TAX WOULD BE VERY HELPFUL,
AND I THINK IF WE COULD DO THAT, NOT ONLY WOULD WE GET AN IMMEDIATE
IMPACT, BUT I BELIEVE THAT THERE WOULD BE A LONG-TERM EFFECT
OF HELPING BUSINESSES IN NEW YORK STATE BECOME MORE COMPETITIVE.
>>
Matt: SHORTINO SAYS, IF PRICES REMAIN AT THEIR CURRENT LEVELS,
SOME SMALL BUSINESSES WILL BE FORCED TO CLOSE.
>>
SOME OF US, OF COURSE, THAT HAVE BEEN AROUND FOR A LONG TIME
WILL BE ABLE TO WEATHER THE STORM AND CONTINUE ON EVENTUALLY
PASSING THE PRICES ON TO THE CONSTRUCTION USER. SOME OF THE
SMALLER ONE- AND TWO-MAN COMPANIES, HOWEVER, ARE PROBABLY GOING
TO FALL BY THE WAYSIDE BECAUSE, AS THE GAS PRICES GO UP AND
THE ECONOMY SLOWS DOWN, MARGINS ARE GOING TO SHRINK AND, QUITE
FRANKLY, THERE'S A LOT OF SMALL BUSINESSES OUT THERE THAT ARE
WORKING VERY, VERY CLOSE RIGHT NOW, AND A SMALL DECREASE IN
PROFITS IS PROBABLY GOING TO BE ENOUGH TO TAKE THEM OUT.
(Music)
>>
Gary: JOINING ME IN STUDIO TO DISCUSS THE IMPACT OF HIGH GAS
PRICES ON SMALL BUSINESSES AND THE CONSUMER ARE GARY TSCHAEPE.
HE IS THE REGIONAL PUBLIC AFFAIRS MANAGER FOR TRIPLE-A. HE'S
BEEN CLOSELY MONITORING GAS LEVELS IN THIS AREA. AND ALEX FERRINI.
HE IS THE CO-FOUNDER OF FERRINI KONARSKI ASSOCIATES, A LOCAL
REPRESENTATIVE COMPANY THAT PROMOTES OVER 30 SMALL LIGHTING
COMPANIES, ARCHITECTS AND ENGINEERS. GENTLEMEN, I WANT TO THANK
YOU BOTH FOR JOINING ME AND TAKING TIME OUT OF YOUR DAY. AND
WE'RE GOING TO HAVE A TWO-TRACK CONVERSATION. WE'RE GOING TO
TALK ABOUT THE IMPACT ON SMALL BUSINESSES AND ON CONSUMERS,
AND THEY REALLY ARE TIED IN SO MANY WAYS, BUT I WANT TO BEGIN
WITH Mr. TSCHAEPE AND ASK YOU RIGHT OUT: WHERE DOES IT END?
IS $1.77 OR 1.71 WHERE WE'RE AT?
>>
WELL, IT'S TOUGH TO PREDICT THAT. MEMORIAL DAY IS USUALLY OUR
STEPPING STONE FOR THE SUMMER, AND WE SAW GAS PRICES START TO
STABILIZE AND SLIGHTLY GO DOWN ABOUT A PENNY AND A HALF JUST
BEFORE MEMORIAL DAY. THAT'S NORMALLY A GOOD INDICATION THAT
WE'LL HAVE AN UNEVENTFUL SUMMER. TRIPLE-A DOESN'T, AS A ROUTINE,
PREDICT WHAT THE SUMMER WILL DO BECAUSE THERE WERE SO MANY VARIABLES.
OPEC IS ALWAYS IN THERE AND OUR NATIONAL CONSUMPTION IS ALWAYS
A CONCERN. RIGHT NOW IT LOOKS LIKE, BASED ON PAST YEARS, THAT
WE'RE PROBABLY GOING TO STABILIZE AND NOT DO THE DRASTIC $2-A-GALLONS
THAT WERE PREDICTED EARLIER THIS YEAR.
>>
Gary: USUALLY MEDIA LIKES TO OVERSIMPLIFY AND SAY, OKAY, WHY
IS GAS PRICE -- WHAT'S THE ONE THING THAT IS FORCING GAS PRICES
TO BE HIGH? WELL, THIS IS PUBLIC TELEVISION, SO WE'LL BE A LITTLE
MORE IN-DEPTH. CAN YOU GIVE ME ONE OR TWO THINGS, OR THREE THINGS,
WHY IS GAS $1.71 A GALLON?
>>
WELL, A LOT OF PEOPLE, AS I SAID, ALWAYS BLAME OPEC. IT'S ALWAYS
HOW MUCH OIL WE'RE GETTING FROM OVERSEAS. BUT ACTUALLY A BIGGER
PROBLEM IS THAT WE'RE DRIVING MORE. IN JUST THE PAST DECADE,
EACH AMERICAN HAS DRIVEN MORE THAN 1,500 MILES IN THEIR CARS.
>>
Gary: EXTRA, MORE THAN THEY HAVE?
>>
EXTRA, YEAH, MORE THAN NORMAL. WE'VE GONE UP TO ABOUT ELEVEN-SEVEN,
I THINK IT IS NOW, AS FAR AS AMOUNT OF MILES WE DO PER YEAR,
AND WE'RE USING MORE GAS. WE'RE BUYING BIGGER CARS. WE WENT
FROM 600 GALLONS OF GAS IN 1990 TO ABOUT 103 GALLONS MORE THAN
THAT IN 1999. SO WE'RE BUYING BIGGER CARS AND USING MORE GAS.
WE'RE DRIVING MORE.
>>
Gary: YEAH, BUT DOESN'T THAT USUALLY MEAN THAT, IF YOU BUY MORE,
WE DO IT BY VOLUME. PRICE SHOULD GO LOWER?
>>
IF WE HAD THE VOLUMES INCREASING WITH THE SAME PERCENTAGE, THAT
WOULD BE THE CASE, BUT THAT'S NOT THE CASE. OUR VOLUMES OF INCOMING
FUEL ARE STAYING ABOUT THE SAME AS THEY WERE IN THAT SAME DECADE.
>>
Gary: OKAY.
>>
WE'RE CREATING OUR OWN PROBLEM.
>> Gary: LET'S TALK TO Mr. FERRINI. NOW, Mr. FERRINI, YOUR COMPANY,
SEVEN OFFICES, ELEVEN SALES REPS, NEW YORK, VERMONT, NEW HAMPSHIRE,
MAINE, TRAVELLING FIVE TO 600 MILES A WEEK.
>>
YES.
>>
Gary: WHAT'S THE BITE BEEN LIKE? (Chuckling)
>>
WELL, IT HASN'T BEEN PLEASANT BUT THERE ISN'T REALLY VERY MUCH
WE CAN DO ABOUT IT. WE'RE IN A CONSTANTLY COMPETITIVE SITUATION,
SO I CANNOT REALLY SAY THAT ANY -- MYSELF OR ANY OF MY SALESMEN
WOULD NOT MAKE A CALL BECAUSE GASOLINE PRICES HAVE GONE UP.
WE CERTAINLY ARE GOING TO STILL GO OUT AND STILL MAKE THE CALLS
THAT WE NEED TO MAKE IN ORDER TO MAKE OUR SALES. BUT I WILL
SAY THAT, FROM A MANAGEMENT POINT OF VIEW, WE CERTAINLY ENCOURAGE
OUR SALESMEN TO BE MORE EFFICIENT IN PLANNING OUT THEIR DAY,
NOT DOUBLING BACK AND FORTH ACROSS THE CITY, TO TRY AND ECONOMIZE
ON THE CALLS THAT THEY MAKE TO KEEP EXPENSES DOWN. WE SEE THE
IMPACT IMMEDIATELY. OUR SALESMEN ALL FILL OUT WEEKLY EXPENSE
REPORTS. WE PAY THEM ON A THREE-WEEK CYCLE.
>>
Gary: CAN I ASK WHAT THAT NUMBER WOULD BE? YOU KNOW, DO YOU
HAVE A NUMBER THAT YOU SAY, BOY, I PAID THIS MUCH MORE THAN
I PAID LAST YEAR AT THIS TIME FOR GAS?
>>
WELL, I LOOKED AT SOME NOTES. AT $1.25 A GALLON, IT WOULD COST
AROUND $22 OR $23 TO FILL UP MY CAR, AND THIS WEEK I FILLED
UP MY CAR AND IT WAS $32. SO I USE ABOUT TWO TANKFULS OF GAS
A WEEK. I DRIVE ABOUT 600 MILES A WEEK. I THINK MY SALESMEN
PROBABLY DRIVE BETWEEN FOUR AND 600 MILES A WEEK. SO THAT PROBABLY
TRANSLATES OUT TO AN EXTRA $5 TO $10 A TANK OF GAS, AN EXTRA
$15 A WEEK MAYBE ON AN AVERAGE PER SALESMAN; SO PROBABLY 7 OR
$8,000 A YEAR TO MY AGENCY IN ADDITIONAL TRANSPORTATION COSTS.
>>
Gary: AND I -- YOU KNOW, LET ME FOCUS ON THAT JUST FOR A LITTLE
BIT. NOW, FOR A SMALL COMPANY -- AND I'M NOT SAYING YOUR COMPANY
IS -- IT'S A GOOD HEALTHY COMPANY. BUT WHAT'S A SEVEN- TO TEN-THOUSAND-DOLLAR
BITE OUT OF YOUR COMPANY? WHERE DOES THAT COME FROM?
>>
IT COMES OUT OF OUR BOTTOM LINE. WE HAVE TO PAY EXPENSES TO
OUR SALESPEOPLE AND WE HAVE TO SHOULDER THOSE EXPENSES, AND
THAT JUST MEANS THAT WE ARE GOING TO MAKE LESS INCOME; AND I
THINK THAT HOW THAT TRANSLATES OUT IS TO US PERSONALLY, WE ARE
GOING TO REALIZE LESS COMMISSION, LESS INCOME INDIVIDUALLY,
AND I THINK THAT THAT IMPACT AFFECTS US AS CONSUMERS. BUT I
DON'T THINK IT'S GOING TO AFFECT MY BUSINESS. I DON'T THINK
I WOULD MAKE A BUSINESS DECISION AND SAY TO MY SALESPEOPLE:
DON'T MAKE A CALL OR STOP MAKING CALLS BECAUSE GAS HAS GONE
UP. WE SIMPLY CANNOT DO THAT.
>>
Gary: YOU DON'T HAVE THAT OPTION. YOU'RE IN A VERY COMPETITIVE
BUSINESS.
>>
RIGHT.
>>
Gary: WHAT ABOUT COMPANIES LIKE -- WELL, DELIVERIES, AS WE SAW
IN MATT CUMMINGS' PACKAGE FOR RADEC ELECTRIC, THEY HAVE 50 VEHICLES
OUT THERE. THAT IS AN OVERHEAD COST THEY CAN'T CUT. THE DRIVER
SAID SOMETHING VERY INTERESTING TO ME THAT GAS IS FIXED, YOU
KNOW, WE GOTTA DO THIS, BUT MAYBE LABOR'S NOT FIXED. MAYBE I
DON'T NEED TO BE HERE. MAYBE I CAN GO AWAY BEFORE A TRUCK OR
THE GAS PRICES.
>> SMALL BUSINESS GETS BIT TWICE. OBVIOUSLY, THEIR OPERATING
EXPENSES ARE GOING TO GO UP BECAUSE THEY'RE PAYING GAS. THEY
ALSO HAVE TO DEAL WITH THE FACT THAT OUR ECONOMY IS SLUGGISH
NOW AND OUR CONSUMERS ARE SPENDING MORE MONEY FOR THEIR GASOLINE,
SO THEY'RE HAVING LESS MONEY TO SPEND ON THEIR PRODUCT. IT'S
A DOUBLE-EDGED SWORD AS FAR AS THE SMALL BUSINESS GOES. I THINK
IT WOULD BE CAUSE FOR CONCERN ABOUT A SMALL BUSINESS PERSON.
>>
Gary: YOU HAVE SOMEHOW -- AT WHAT POINT, Mr. FERRINI, DO YOU
PASS THIS ON TO YOUR --
>>
WELL, IN OUR BUSINESS, UNFORTUNATELY, WE CAN'T PASS THAT ON.
THE PRICES ARE PRETTY MUCH SET BY COMPETITION. WE GET QUOTATIONS
FROM OUR FACTORIES AND WE PASS THOSE ON IN CONSTRUCTION BID
PROJECTS. SO THAT IS A NON -- THERE IS NO POSSIBLE WAY A SALES
AGENCY COULD PASS THAT ON, BUT WE DO FEEL THE IMPACT, AND I
WOULD SAY THAT ALL IT DOES IS MAKE US MORE AWARE AS MANAGERS
AND MAKE US MORE AWARE AS SALESPEOPLE OUT ON THE ROAD TO TRY
AND BE MORE EFFICIENT.
>> Gary: I WANT TO TALK ABOUT THAT IN A MINUTE. I WANT TO GET
BACK TO A POINT THAT GARY TSCHAEPE MADE, AND THAT WAS WHY IS
GAS COSTING SO MUCH? AND A LOT OF IT IS A HIGHER DEMAND BUT
THE SUPPLY HAS NOT INCREASED WITH THAT DEMAND. IN THAT SENSE,
AREN'T CONSUMERS THEIR OWN WORST ENEMY HERE? WE'RE BUYING THESE
HUGE PRAIRIE SCHOONER VEHICLES NOW. WE'RE MOVING FARTHER AND
FARTHER AND FARTHER AWAY FROM SERVICES. YOU MAY LIVE IN PITTSBURGH
BUT YOUR DOCTOR'S IN GREECE, AND YOUR KID PLAYS HOCKEY IN FAIRPORT
AND YOU HAVE TO GO TO THE CITY FOR THIS REASON. WE ARE JUST
IN THE CAR OVER -- YOU KNOW, TRAVELLING, TRAVERSING THE COUNTY
BACK AND FORTH IN BIGGER VEHICLES, MORE GAS-HUNGRY VEHICLES;
SO IN A SENSE WE'RE DOING THIS TO OURSELVES, AREN'T WE?
>>
YEAH. TO A BIG EXTENT WE ARE DOING THAT TO OURSELVES. ALEX MADE
A GOOD POINT AS FAR AS THE SALES MANAGERS COMBINING THEIR TRIPS
AND ECONOMIZING A LITTLE BIT MORE, AND THAT'S GOOD COMMON BUSINESS
SENSE EVEN AT HOME. COMBINE THOSE TRIPS TO THE STORE WITH THE
TRIP TO TAKING THE KID TO SOCCER IN BRIGHTON. IF YOU HAVE A
TWO-CAR FAMILY, USE THAT SMALLER CAR A LITTLE BIT MORE OFTEN
THAN YOU WOULD. MAY NOT HAVE THE LEG ROOM THAT YOU'RE USED TO
OR COMFORT, BUT YOU ARE GOING TO SAVE AT THE PUMP. YOU'RE RIGHT,
WE ARE OUR OWN WORST ENEMY WHEN IT COMES TO GASOLINE, AND REALLY
THIS IS NOTHING NEW. IT'S BEEN GOING ON FOR DECADES.
>>
I WOULD LIKE TO SAY SOMETHING ABOUT THAT. YEARS AGO, WE'VE BEEN
IN BUSINESS 31 YEARS, AND I CAN REMEMBER NOT TOO LONG AGO WHEN
BEING A SALESMAN OUT ON THE ROAD DURING THE WEEK, THE TRAFFIC,
THE LEVEL OF TRAFFIC, THE NUMBER OF PEOPLE WAS -- IF YOU WANTED
TO GET ANYTHING DONE, YOU DID IT ON -- IF YOU WERE A SALESMAN,
YOU HAD THE OPPORTUNITY TO DO SOME PERSONAL BUSINESS, YOU DID
IT ON TUESDAY MORNING OR WEDNESDAY AFTERNOON WHEN NOBODY WAS
AROUND. THERE ISN'T A TIME ANY MORE WHEN NOBODY IS NOT AROUND.
EVERYTHING IS BUSY ALL THE TIME, AND I DO LOOK AROUND AND I
OBSERVE A LOT THAT ALMOST EVERY PLACE I LOOK, THERE'S ONE PERSON
IN THE CAR. SO IT'S LIKE EVERYBODY HAS THEIR OWN PERSONAL VEHICLE,
AND IT DOESN'T --
>> Gary: OR TWO OR THREE.
>>
-- HAVE VERY MUCH TO DO WITH ME BEING A SMALL BUSINESSMAN, BUT
AS A CONSUMER, I MEAN, THAT'S AN OBSERVATION I MAKE WHERE, AS
A SALESMAN, THERE JUST IS NOT A BUSY -- THERE IS NO NON-BUSY
TIME ANY MORE.
>>
AND WE'RE TALKING ROCHESTER, NEW YORK. TAKE THAT SAME SCENARIO
OUT WEST WHERE THERE'S 24-HOUR RUSH HOUR, AND HOW DO THEY DEAL
WITH IT? THAT'S ONE OF THE REASONS THAT CALIFORNIANS ARE STILL
PAYING $2 A GALLON FOR THEIR GASOLINE.
>>
Gary: I'M GOING TO MOVE INTO ONE OTHER QUICK AREA. BEFORE I
LEAVE, THOUGH, I UNDERSTAND THAT UNITED PARCEL SERVICE, U.P.S.
IS NOW GIVING A SMALL SURCHARGE FOR THEIR DELIVERIES THAT SAY
THIS IS TO PAY FOR OUR EXTRA GAS EXPENSES. SO MAYBE IT'S KIND
OF THAT USER FEE TYPE OF SETUP THAT MAY BE HAPPENING FOR PEOPLE
WHO NOW ARE USED TO SERVICES THAT ARE -- THAT REALLY ARE, YOU
KNOW, BASED ON DELIVERY SYSTEM. LIKE U.P.S., UNITED PRESS INTERNATIONAL,
EVEN THE POST OFFICE. ALL THESE VEHICLES, YOU KNOW, WE'VE COME
-- WE CLICK ON THE INTERNET. WE BUY SOMETHING. IT COMES DELIVERED
SOMEHOW. AND SO THOSE COSTS MAY GO UP THERE. BRIEFLY, THOUGH,
I JUST WANT TO TALK ABOUT THE DEALERSHIPS. YOU KNOW, WE SPOKE
WITH JOHN LIBRANT AT THE ROCHESTER AUTO DEALERS ASSOCIATION.
WE SPOKE WITH JOHN CLAYTON OVER ON LYALL AVENUE SUNOCO. THEY'RE
ASSURING US, THEY'RE SWEARING TO US THAT WE'RE NOT MAKING OUT
HERE. THE GUYS WHO PUMP THE GAS ARE JUST NOT MAKING OUT. WE'RE
SMALL BUSINESS FOLKS WHO ARE GETTING SQUEEZED OUT. COMPANIES
HAVE WHAT THEY CALL ZONE PRICING, WHICH MEANS THAT A ZONE COULD
BE ONE STATION AS DETERMINED BY AN OIL COMPANY, AN AREA, A STREET
BLOCK. IT COULD BE ANYTHING. AND THEY BASE THE PRICE OF WHAT
THEY SELL THE GASOLINE TO THAT DEALER BASED ON THE COMPETITION
THAT THEY PERCEIVE THAT THAT DEALER HAS. SO YOU MAY PAY 10 CENTS
LESS OUT IN A RURAL AREA FOR GAS THAN YOU DO -- AND THAT DEPENDS
ON WHO DELIVERS IT TO YOU AND WHAT THE ZONE PRICING IS.
>>
I WOULD THINK THAT THEY'RE IN THE SAME COMPETITIVE SITUATION
WE ARE. I DON'T THINK THAT THERE'S VERY MUCH THAT THEY CAN DO
ABOUT IT. I DON'T THINK THAT THEY CAN PARTICULARLY DRIVE THE
PRICES ON THEIR OWN EITHER. THEY'RE SOMEWHAT CAPTIVES OF THEIR
OWN COMPETITORS.
>>
IT'S A DIFFICULT BUSINESS TO CRUNCH NUMBERS, BUT BASICALLY THESE
GASOLINE RETAILERS ARE BUYING THEIR GAS FOR ABOUT $1.10. EVERY
GALLON OF GAS THAT THEY RECEIVE IS GETTING ROUGHLY 40 CENTS
IN FEDERAL TAX AND STATE TAX BEFORE NEW YORK STATE THROWS ITS
10 OR 12-CENT SALES TAX ON. YOU CAN SEE RIGHT THERE THAT ADDS
UP ALREADY TO THE 1.60. THEY'RE SELLING IT FOR $1.71 TO $1.79.
SO THEIR PROFIT MARGIN ISN'T WHAT IT USED TO BE; SO THERE'S
PROBABLY SOME TRUTH IN WHAT THEY'RE SAYING.
>>
Gary: LET'S LOOK AT WHAT YOU JUST MENTIONED AS THE HIDDEN TAXES
AND LET'S FIND OUT IF THERE IS AN AGENDA OR SOMETHING SMALL
BUSINESS WOULD LIKE TO SEE, SOMETHING TRIPLE-A WOULD ADVOCATE
FOR, AND THE TRIPLE-A HAS BEEN VERY MUCH ADVOCATING THE GOVERNMENT
STAND UP AND DO SOMETHING. THE POINT BEING IS THE TAXES THAT
YOU FIND IN THE GALLON OF GASOLINE ARE FOR THE MOST PART HIDDEN.
SOME LAWMAKERS TAKE EXCEPTION TO THAT. BUT HOW MANY GAS STATIONS
DO YOU WALK UP AND SAY HERE'S WHAT WE PAY. YOU JUST HEARD IT
FROM GARY TSCHAEPE. $1.10 IS MY COST. HERE'S THE FEDERAL TAX.
HERE'S THE STATE TAX. HERE'S WHAT I MAKE. YOU DON'T SEE THAT
TOO OFTEN. EVEN AT 50, 60 CENTS A GALLON TAXES, YOU KNOW, THAT
IS SOMETHING THE GOVERNMENT CAN DO. WHAT'S TRIPLE-A's POSITION?
>>
TRIPLE-A VERY STRONGLY SUPPORTS EVEN A MORATORIUM ON THE STATE
SALES TAX. THAT HAS THE POTENTIAL TO DROP OUR GASOLINE PRICES
10 AND 12 CENTS OVERNIGHT, JUST BY PUTTING -- EVEN IF IT'S JUST
THROUGH THE SUMMERTIME, THAT'S ONE THING. WE ARE NOT IN FAVOR
OF THE ZONE PRICING, WHICH HAS BEEN IN THE STATE NEWS RECENTLY.
HOWEVER, WE DO THINK THAT THE FEDERAL GOVERNMENT SHOULD BE A
LITTLE MORE INVOLVED IN HELPING TO REGULATE THE PRICES. THEY
CAN DO THAT A COUPLE DIFFERENT WAYS. ONE IS TO OFFER SOME TAX
INCENTIVES TO THE DIFFERENT REFINERIES. ANOTHER IS TO MINIMIZE
THE DIFFERENT TYPES OF GASOLINE. THERE ARE 14 GRADES OF SUMMER
GASOLINE REFINING PROCESSES THAT THESE REFINERIES HAVE TO GO
THROUGH JUST TO MAKE THE DIFFERENT ENVIRONMENTAL RESTRICTIONS
THROUGHOUT THE COUNTRY. WE'RE NOT SAYING THAT WE SHOULD REDUCE
IT TO ONE, BUT WE CAN CERTAINLY FIND ONE THAT IS GOING TO MEET
THE ENVIRONMENTAL STANDARDS AND ALSO OUR GASOLINE STANDARDS;
BECAUSE OBVIOUSLY, WHEN YOU GET IT DOWN EVEN FROM 14 TO A COUPLE
DIFFERENT REFINING PROCESSES, THAT REFINERY IS GOING TO SAVE
MONEY AND THAT, IN TURN, IS GOING TO SAVE US MONEY.
>>
Gary: WHAT ABOUT SMALL BUSINESSES? FOLKS YOU TRAFFIC WITH OR
YOU PERSONALLY, WHAT DO YOU THINK ABOUT? SHOULD GOVERNMENT BE
TAXING GAS AT THAT RATE?
>>
WELL, I AM NOT AN ADVOCATE OF BIG GOVERNMENT.
>>
Gary: WELL, COLOR ME SURPRISED. (Laughing)
>>
GEE WHIZ. SMALL BUSINESSMAN IS NOT AN ADVOCATE OF BIG GOVERNMENT.
WOW, I MUST BE ALL BY MYSELF! I DON'T THINK I HAVE ANY HARD/FAST
POSITIONS ON THAT. I THINK THAT I -- I CERTAINLY THINK THAT
WE ALL HAVE TO PAY TAXES. I'M VERY GRATEFUL FOR LIVING IN UNITED
STATES, AND ONE OF THE THINGS I'VE NEVER COMPLAINED ABOUT IS
TAXES. I DON'T PARTICULARLY LIKE EXCESSIVE TAXES. I SUSPECT
A LOT OF OUR TAXES FOR GASOLINE GO TO ROAD CONSTRUCTION. AM
I CORRECT ABOUT THAT?
>>
I DON'T KNOW THE BREAKDOWN.
>>
THE HIGHWAY FUND. I THINK THERE'S A -- THAT GOES INTO THE HIGHWAY
FUND. >> Gary: LOCK BOX FUND.
>>
HOW MANY TIMES CAN YOU SAY THAT?
>>
Gary: WELL, LOCK BOX FUNDS ARE -- WELL, IT DEPENDS WHO'S GOT
THE KEY. LET ME JUST SAY THAT HERE'S ONE ARGUMENT THAT WE HAVE
HEARD IS THAT WE JUST HAD THE FEDERAL GOVERNMENT GIVE US A 1.3-TRILLION-DOLLAR
BUDGET CUT, WHICH THE ADMINISTRATION SAYS WAS NOT BIG ENOUGH,
SHOULD HAVE BEEN MORE. THE STATE GOVERNMENT SEEMS FLUSHED TO
THE POINT WHERE THEY FEEL NO NEED TO PASS A BUDGET THIS YEAR,
PERHAPS, FOR THE FIRST TIME, JUST LED IT RIDE BECAUSE THINGS
ARE GOING GOOD. GIVEN THAT, MAYBE IF YOU TOOK THE FEDERAL --
MAYBE IF THE FEDERAL EXCISE TAX OR THE STATE TAXES THAT ARE
GOING TO FUEL THE SURPLUSES -- NO PUN INTENDED -- THAT WE'RE
SAYING, PERHAPS IT WOULD BE BETTER USED FOR SMALL BUSINESS AND
CONSUMERS ON REDUCING THE PRICE OF GAS. WHAT DO YOU THINK OF
THAT ARGUMENT?
>>
IT'S PROBABLY AN OVERSIMPLIFICATION. I'M SURE THAT THERE --
>>
Gary: THIS IS TELEVISION, ALEX. (Laughter) FRANKLY, WE DO A
LOT OF THAT.
>>
I'M SURE THAT THERE ARE RESTRICTIONS ON THE MONEYS AND IF WE
PROBABLY KNEW ALL THE INS AND OUTS OF HOW THOSE TAXES WERE SPENT
-- I MEAN, I'M NOT SURE YOU CAN RELATE A STATE TAX RELIEF TO
RELIEF FOR GASOLINE PRICES. I JUST DON'T KNOW THE ANSWER TO
THAT QUESTION. I CERTAINLY THINK I WOULD LIKE TO SEE THE TAXES
LOWER AND I CERTAINLY, FOR THE SAKE OF MY SALESPEOPLE, WOULD
LIKE TO SEE THE PRICE OF GASOLINE COME DOWN BECAUSE IT WOULD
MAKE OUR COST PER SALES CALLS LESS. I'D LIKE TO MAKE A COMMENT
ABOUT ZONE PRICING THOUGH. I HEARD YOU MENTION THAT. THE FIRST
TIME I'VE EVER HEARD THAT APPLIED TO GASOLINE TAXES. WE HAVE
MARKET AREA PRICING IN OUR BUSINESS, AND IS THAT WHAT ZONE PRICING
IS IS MARKET AREA PRICING FOR GASOLINE?
>>
Gary: IN THE WIDER THEORY YES, BUT THE ZONE PRICE COULD BE ONE
STATION. IT'S ALL SET BY THE OIL COMPANIES. IN OTHER WORDS YOU
CAN TAKE ONE STATION AND CALL THAT A ZONE, AND YOUR NEIGHBOR
DOWN THE STREET OR THE GAS A COUPLE BLOCKS AWAY IS IN A DIFFERENT
ZONE. I MEAN, THEY BASE IT ALMOST ON AN INDIVIDUAL BASIS IN
A SENSE THAT WHO'S YOUR COMPETITION AND WHAT THE MARKET WILL
BEAR.
>>
BUT WE SEE THAT THROUGHOUT BUSINESS. YOU CAN GO TO SUPERMARKETS
AND HAVE THE SAME ITEM PRICED DIFFERENTLY IF THE SUPERMARKET
IS LOCATED IN A DIFFERENT SECTION OF THE CITY. SO I DON'T FIND
THAT TOO UNUSUAL THAT THERE WOULD BE SOMETHING CALLED ZONE PRICING
OR MARKET AREA PRICING IN GASOLINE COSTS. I JUST NEVER HEARD
IT BEFORE, AND I DON'T KNOW THAT THERE'S A POSITION TO BE TAKEN
AGAINST THAT. I THINK IT'S PROBABLY JUST -- I THINK THAT'S PROBABLY
JUST A FACT OF BUSINESS LIFE.
>>
I THINK MORE TO THE POINT, THERE ARE OTHER WAYS THAT THEY CAN
REDUCE THE COST OF GASOLINE FOR CONSUMERS BESIDES THE ZONE PRICING.
I MEAN, TO ME ZONE PRICING KIND OF JUMPS AT THE FREE ENTERPRISE.
I MEAN, IF SOMEONE WANTS TO CHARGE $2.30 FOR A GALLON OF GAS,
IT'S HIS RIGHT TO DO SO.
>>
IF THEY CAN GET IT IN THAT PARTICULAR STATION. >> IT'S MY RIGHT
NOT TO GO THERE.
>> EXACTLY.
>> THAT'S WHY I THINK ZONE PRICING IS -- I THINK IT'S NOT THE
BEST ALTERNATIVE WHEN YOU LOOK AT THE DIFFERENT WAYS THAT WE
CAN LOWER OUR EVERYDAY COST OF GASOLINE. >> SO YOU'RE SAYING
THAT TRIPLE-A IS NOT NECESSARILY ATTACKING THE CONCEPT OF ZONE
PRICING?
>> CORRECT. WE THINK THERE ARE BETTER AVENUES TO TAKE WE ARE
NOT SUPPORTIVE OF IT BECAUSE THERE ARE OTHER THINGS THEY CAN
DO. DROPPING 12 CENTS OVERNIGHT BY DROPPING THE SALES TAX TEMPORARILY.
>> Gary: LET'S TAKE IT FROM THIS, AND WE CAN TALK AS CONSUMERS
AND AS SMALL BUSINESS PEOPLE. THERE ARE SOME THINGS WE CAN CONTROL:
HOW MANY MILES WE DRIVE, THE SORTS OF VEHICLES WE DRIVE.
>>
VERY DEFINITELY.
>>
Gary: LET ME ASK YOU THIS: DO YOU SEE A POINT WHERE SOME SMALL
BUSINESSES WILL HAVE TO SAY -- LIKE SOME OF THESE HYBRID CARS
LIKE THE HONDA INCITE, WHICH IS A PRETTY DECENT SIZED CAR. IT'S
A COMBINATION ELECTRIC AND GAS, GETS 70 MILES TO THE GALLON,
AND IT STAYS ON THE HIGHWAY. I WAS NEXT TO ONE THE OTHER DAY;
IT WAS GOING 65 MILES AN HOUR IN A 55 ZONE, BUT -- BUT IT WAS
GOING PRETTY QUICK ON ONE OF THOSE ROADS. I MEAN, IS THAT THE
TYPE OF TECHNOLOGY THAT I THINK -- IS THAT WHERE SMALL BUSINESSES
ARE GOING TO HAVE TO START LOOKING AT, AND CONSUMERS?
>>
I THINK VERY DEFINITELY THAT, IF WE CAN'T DO ANYTHING ABOUT
GASOLINE PRICES, ONE OF THE THINGS WE CAN DO IS DO SOMETHING
ABOUT THE CHOICES WE MAKE IN THE VEHICLES THAT WE DRIVE. SO
I THINK IT'S GOING TO DRIVE PEOPLE WHO ARE OUT ON THE ROAD AND
WHO HAVE TO SPEND THAT MONEY IN ORDER TO MAKE A LIVING, HAVE
TO SPEND THE MONEY FOR GASOLINE IN ORDER TO MAKE A LIVING, IS
GOING TO HAVE AN IMPACT ON WHAT THEY SELECT AS A VEHICLE, TO
LOWER THEIR COST PER SALES CALLS SO THAT THEY HAVE MORE MONEY
IN THEIR POCKET AT THE END OF THE DAY.
>> Gary: IS THIS GOING TO AFFECT YOUR NEXT VEHICLE PURCHASE,
DO YOU THINK?
>>
I THINK IT WILL. I THINK IT VERY DEFINITELY WILL, AND I THINK
IT VERY DEFINITELY WILL AFFECT THE SALESPEOPLE THAT WORK FOR
ME.
>>
AS WE MENTIONED EARLIER, WE ARE OUR OWN WORST ENEMY WHEN IT
COMES TO HOW MUCH GAS WE PUT IN OUR CAR AND HOW OFTEN WE PUT
GASOLINE IN OUR CAR. OBVIOUSLY THAT MEANS THAT WE HAVE THE MEANS
OR, IF NOT THE MEANS RIGHT NOW, THE MEANS AVAILABLE TO US TO
CUT BACK OURSELVES ON HOW MUCH GAS WE SPEND. AS WE MENTIONED
EARLIER, TAKE THE SMALLER CAR, BUY THE SMALLER CAR IF YOU'RE
IN THE MARKET FOR ONE. EVEN CHANGING YOUR DRIVING HABITS WITH
THE QUICK STOPPING AND THE STARTING AND AVOIDING THE STOP-AND-GO
STREETS AND THE STREETS WITH STOP SIGNS AS MUCH AS POSSIBLE,
AND KEEPING EVEN YOUR SPEED AT REQUIRED LEVELS, STATE-MANDATED
LEVELS, IS GOING TO SAVE A LOT OF GASOLINE AND IS GOING TO PUT
MONEY BACK IN YOUR POCKET.
>>
Gary: WELL, AS IT STANDS RIGHT NOW, SALES OF NEW CARS ARE DOWN
14%. SOME DEALERSHIPS ARE OFFERING A $300 REBATE TO BUY GAS
WITH, SO PERHAPS IF YOU'RE A CONSUMER, THIS MAY BE A GOOD TIME
TO GET A BARGAIN ON A BIG VEHICLE, (Laughing) BUT YOU'VE STILL
GOT TO PUT FUEL IN IT. I KNOW WE DON'T PROGNOSTICATE ON GAS
PRICES, SO TRIPLE-A's FEELING IS THAT, RIGHT NOW, THAT WE'RE
IN FOR AN UNEVENTFUL SUMMER, THAT WE'RE GOING TO BE RIGHT WHERE
WE ARE?
>>
YEAH. EVERYTHING THAT HAPPENED IN PAST YEARS LEADING INTO MEMORIAL
DAY HAS HAPPENED NOW. NOW GRANTED WE'RE STILL 14 TO 16 CENTS
MORE THAN WE WERE EVEN LAST YEAR AT MEMORIAL DAY. BUT THE INDICATORS
ARE THAT OUR SUMMER GAS PRICES ARE NOT GOING TO MAKE THIS STAGGERING
JUMP. AND AGAIN THERE ARE SO MANY VARIABLES. IT'S REALLY DIFFICULT
TO PUT A NUMBER ON IT.
>>
Gary: WELL, GARY TSCHAEPE FROM TRIPLE-A, ALEX FERRINI FROM FERRINI
KONARSKI ASSOCIATES, THANK YOU SO MUCH FOR JOINING US. IT WAS
A PLEASURE TALKING TO YOU BOTH. I HOPE YOU GOT SOME VALUABLE
INFORMATION AT HOME ABOUT THAT BECAUSE THAT'S ALL THE TIME WE
HAVE FOR RIGHT NOW. I AM CERTAIN WE'LL BE ABLE TO WATCH GAS
PRICE WATCHING THIS SUMMER. I'M SURE IT'S GOING TO BE KIND OF
A HOBBY. IF YOU'D LIKE MORE INFORMATION ON HOW YOU CAN CURB
YOUR GAS SPENDING, INCLUDING WHERE TO FIND THE CHEAPEST GAS
NEAR YOU, CHECK OUT THESE THREE WEB SITES: IT'S gaspricewatch.com,
aaa.com, AND THE ENERGY INFORMATION ADMINISTRATION AT eia.doe.gov.
THAT'S ALL THE TIME WE HAVE FOR THIS WEEK'S "NEED TO KNOW."
WE'LL SEE YOU NEXT WEEK.
(Music)