Driven to higher prices Businesses charging more to deliver, conserving gas By Vikki Ortiz and Rick Romell of the Journal Sentinel staff Last Updated: May 26, 2000

From pizza parlors to alfalfa farmers, area businesses are being forced to raise prices, add delivery fees and alter driving habits to keep pace with soaring gas prices.

The Milwaukee County Transit System said this week that it is $400,000 over budget because of high diesel fuel prices - a deficit that might have to be paid for by limiting bus routes, according to Tom Kujawa, general manager for Milwaukee Transport Services Inc.

"Obviously, we're worried," Kujawa said. "I think a lot of people were hit very hard and very unexpectedly."

Southeastern Wisconsin drivers are paying the second-highest prices in the nation for reformulated gas, the American Automobile Association reported.

As of Wednesday, regular unleaded gas was averaging $1.72 a gallon at self-service pumps in the Milwaukee area, ranking just after the Chicago average of $1.84 among metropolitan areas required by the federal Environmental Protection Agency to use the reformulated gas. Diesel prices are skyrocketing as well, although the mandate does not affect them, Kujawa said.

At Papa Stu's pizza parlor on the south side of Milwaukee, owner Stuart Groth said he felt guilty even thinking about raising prices 10% and adding a $1 delivery fee. But with no end to the rising fuel costs in sight, Groth said he had no alternative. The new prices will go into effect next week.

"I just can't eat it anymore. I have to do something, or I'm going to have to close my doors," he said.

Like many other florists, Milwaukee Flowers and Gifts, 1925 W. Wisconsin Ave., has begun charging customers an extra $1 for nearby flower deliveries and an extra $2 for deliveries outside the city, according to owner Susan Weisling.

"People don't understand how this all has to be paid for," Weisling said. "It's going to get passed on."

Fred Kaul, whose 250-acre Town of Grafton farm has been in the family since the 1850s, said soaring gasoline prices would raise production costs and threaten already-strapped farmers.

"It's certainly bad," said Kaul, who raises sweet corn, wheat and alfalfa. "I think it's going to drive the nail into a lot of coffins on the farm again, because commodity prices and farm prices are . . . at about a 35-year low. Then you increase the cost of production even more, it just becomes a losing battle."

The high gas prices are cramping cab drivers, frustrating freight delivery companies and driving limousine drivers to take drastic gas-saving measures.

"This is brutal," said Tim McDonald, president of Taylor Made Express, a freight-delivery company in Cudahy that runs its own vehicles and contracts with owner-operators who buy their gas.

"We use a lot of fuel," McDonald said. "We've had to give some of our customers some fuel surcharges, which they're not real happy about. We've got a lot of owner-operators who are screaming."

Taylor Made started levying a 2% fuel surcharge about six weeks ago. The fee now is up to 6% and applies to about 90% of its customers. If an owner-operator hauls a load, he or she gets the extra 6%, McDonald said.

Meanwhile, Taylor Made has stopped using its full-size, gas-guzzling vans.

"We've got full-sized cargo vans that are getting 12 to 13 miles to the gallon," McDonald said. "We're parking those, and ultimately we're going to sell them because I don't think this is going to go away too fast, and we're buying minivans."

At Great Italian Limousine, owner Joe Militello doesn't leave his cars in idle while waiting for customers anymore because shutting the cars off saves gas.

"Every little bit counts, I guess," Militello said.

While other businesses pass on at least some of their increased costs, Milwaukee cab drivers are getting pinched. They can't raise fares - the city sets them - and cabbies pay for their own gasoline.

"Terrible, lousy," Richard Seurer, 48, said of the situation as he waited outside the Hyatt Regency on Wednesday, hoping to ferry good-tipping Atlanta Braves baseball players to County Stadium for their game with the Milwaukee Brewers.

At Milwaukee Transport Services, which operates buses under contract with Milwaukee County, Kujawa said officials never anticipated that gas prices would go so far over budget. The county planned to spend 63 cents per gallon this year because it is exempt from state and federal taxes. Instead, it's paying 80 cents per gallon of diesel, Kujawa said.

County transit officials are hoping to make up for the deficit by pulling from their advertising budget, maintenance and service programs and other areas. If that doesn't take care of it, the county could alter bus schedules, Kujawa said.

"Right now, it's a concern," he said.

In Waukesha, though, the high gas prices have worked in favor of Waukesha Metro Transit. Ridership has increased about 5% early this year, said Brian Engelking, marketing director.

In fact, when the first gas price "shocks" were felt in February, ridership increased 6% over February 1999, Engelking said.

"Our fuel costs have increased, but we've had a significant increase in ridership," Engelking said. "The positives outweigh the negatives so far."

Robert Johnson, Waukesha Metro Transit director, said the transit system is paying 95 cents a gallon for diesel fuel, up from 65 cents in November, before prices began rising.

That's a 46% increase, which will cost the transit system an additional $56,000 a year for fuel if prices stay the same, he said. The transit system buys its fuel in bulk and does not pay taxes on it. He said it was too early to tell whether the increased ridership would cover the higher fuel costs.

But other Waukesha-area businesses are feeling the high-priced-gas headache. Wisconsin Coach Lines in Waukesha has seen its fuel prices rise 40% to 50% in the last six months, and it is paying about 50 cents more for a gallon of gas.

Tom Dieckelman, vice president of Wisconsin Coach Lines, said the company "bit the bullet for as long as we could" and held off on raising prices. But it recently had to begin charging a 4% to 5% surcharge on charters, "much like the airlines are doing" on tickets, he said.

For a charter trip to Chicago, that surcharge would be $20, Dieckelman said.

Lori Holly, Mike Johnson and Larry Sandler of the Journal Sentinel staff contributed to this story.

http://www.jsonline.com/news/state/may00/gas26052500a.asp

-- Martin Thompson (mthom1927@aol.com), May 26, 2000