NORTHWEST ARKANSAS — Rising gasoline prices touch all areas of the economy.
From a local crop farmer to the world’s largest retailer, fuel costs play a key role in how business is done.
Gasoline prices locally shot up 30 percent in the past six months, hit $3.20 Thursday, and are expected to go higher.
Gentry farmer Kent Swinney said he is happy soybean and wheat prices are up, but fears he will pump the extra revenue into his diesel tank.
And what is not going into his diesel tank he is using to pay for the rising cost of fertilizer, also a petroleum-based product.
Meanwhile, Bill Simon, president and chief executive officer of Walmart U.S., said pressure from higher energy and commodity costs are factors that affect the retailer’s logistics and transportation costs.
“Rising gas prices and still high unemployment levels weigh on the minds of our customers,” he said Tuesdayduring a prerecorded earnings release.
He said the amount of cash customers have in discretionary spending also ties directly to sales.
Micah Neal, owner of Neal’s Cafe in Springdale, said higher fuel prices are hitting his bottom line.
“Historically when fuel prices get above $2.50 per gallon, people return to sack lunches and we typically see a drop-off in sales,” he said.
“At the same time our food costs are rising along with a higher fuel surcharge added by suppliers.”
Fayetteville resident Tara Wolters is already feeling the gasoline price pinch.
“Because prices are so high, I probably won’t be venturing out to shop or eat out thisweekend,” she said Thursday afternoon.
If prices remain high for an extended period, Wolters said eating out will become something reserved for special occasions.
More than half of consumers ate out less during the gasoline price spikes during summer 2008, according to The Nielsen Company.
Ne arly two-thirds of people cut overall spending and 78 percent combined shopping trips in an eff ort to save gas.
Todd Hale, senior vice president of Consumer and Shopper Insights for Nielsen, said 2008 wasthe year “staycation” was created when consumers cut unnecessary travel and spent more time in recreational activities close to home.
“We saw a flurry of meal deals from food retailers and manufacturers as they aggressively fought to win trips that restaurants were losing,” he said.
Hale said he expects businesses to react similarly during this round of gasoline price hikes.
Business, Pages 11 on 02/27/2011