WBEZ | gas station http://www.wbez.org/tags/gas-station Latest from WBEZ Chicago Public Radio en $4 a gallon gas prices: Who's to blame? http://www.wbez.org/story/2011-04-21/4-gallon-gas-prices-whos-blame-85534 <img typeof="foaf:Image" src="http://llnw.wbez.org//npr_story/photo/2011-April/2011-04-22/AP080618019899-gas Mike Groll.jpg" alt="" /><p><p>Gasoline prices are closing in on $4 a gallon. Department of Energy <a href="http://www.eia.doe.gov/oog/info/gdu/gasdiesel.asp" target="_blank">data</a> show the average price for regular gas in the U.S. is $3.84 per gallon. That's 98 cents higher than a year ago, and just an "average." In California, the average price is $4.20 per gallon.</p><p>It's tempting to blame speculators for the price run-up. In March, U.S. Attorney General Eric Holder established a task force to investigate potential fraud in energy markets.</p><p>So far, it's "clear that there are lawful reasons for increases in gas prices, given supply and demand," Holder says in a statement.</p><p>It's also tempting to blame the falling value of the dollar for rising oil prices. After all, oil trades in dollars and since January the U.S. currency is down about 10 percent against the euro.</p><p>But Tom Kloza, chief oil analyst with the Oil Price Information Service, says it's more complicated than just that. Trouble in the Middle East is still spooking markets, and investors want to buy oil.</p><p>"There's a lot of money that's chasing commodities," Kloza says. "And among the money funds that are chasing commodities, the favorite commodity right now is oil."</p><p>The more money that chases a commodity, according to economics 101, the more prices will rise. Kloza says you can add to that a seasonal phenomenon.</p><p>"The market always gets buzzed in the spring," he says. "Sometimes — and I think this may be one of those years — it gets a little bit sloppy drunk."</p><p>Right now, Kloza considers anything above $4 a gallon "sloppy drunk." He says that kind of behavior has consequences.</p><p>"We'll see prices correct or ease back a little bit and we'll spend a driving season where we pay something between $3.25 and $3.75 for gasoline," predicts Kloza.</p><p>Declining consumer demand could make that prediction a reality.</p><p>"Over the last month, the country has pumped about 2.1 percent less gas than a year ago," says Michael McNamara, vice president at MasterCard SpendingPulse. His business tracks purchases made with credit cards, cash and checks.</p><p>McNamara says demand started to suffer when gas rose above $3.25 per gallon in February.</p><p>"Especially going into weekends — people tend to cut back a little bit more on Saturday pumping as opposed to commuting traffic on Mondays and Tuesdays," McNamara says.</p><p>There's other evidence that drivers are paying very close attention to gasoline prices these days. Todd Hendrix says his phone is ringing a lot. He owns Hendrix Industrial Gastrux in Wauconda, Ill. The small business installs kits to convert gasoline-powered vehicles to natural gas.</p><p>Natural gas prices have remained steady recently. When people learn they can save 30 percent or more by burning natural gas, they start bugging Hendrix.</p><p>"We spend a lot of time trying to explain to them why we can't convert their Volkswagen or their BMW or their Mercedes-Benz or something like that," says Hendrix.</p><p>Because of federal regulations, Hendrix says he can't convert just any car that comes in. So he focuses on fleets that put a lot of mileage on their vehicles.</p><p>It costs $10,800 to convert a Ford Crown Victoria at Hendrix's shop. But with government incentives and natural gas at $2.40 per gallon, Hendrix says a fleet manager can pay for a converter kit and start saving money in just a few months. Copyright 2011 National Public Radio. </p> Thu, 21 Apr 2011 15:22:00 -0500 http://www.wbez.org/story/2011-04-21/4-gallon-gas-prices-whos-blame-85534 Venture: A chicken butcher's price dilemma http://www.wbez.org/story/alliance-poultry-farms/venture-chicken-butchers-price-dilemma-84997 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2011-April/2011-04-11/venture.jpg" alt="" /><p><p>For all of us who have bought milk or Corn Flakes lately, the most relevant economic news this week will likely be data on prices. Both the consumer price index and the producer price index come out this week.&nbsp;<br> <br> Consumers may be feeling sticker shock at the store, but it turns out that businesses feel it even more so when they go to stock their shelves. And deciding how much of that cost to pass on to customers requires some fine calculations.<br> <br> One chicken butcher in Chicago's Ukrainian Village is very familiar with that cost-price conundrum. Alliance Poultry Farms is tucked in among a jewelry store, a check-cashing place and a Walgreens on Chicago Avenue. Outside, it advertises "pollos vivos," reflecting its largely Spanish-speaking clientele.<br> <br> Alliance Poultry is a small business, but it’s just as tied to the global economy as any multinational corporation.<br> <br> Like most businesses these days, Alliance Poultry is dealing with higher costs. Co-owner Fayyad Abdallah says the price of cracked corn that he feeds to the birds has doubled in about a year and a half.<br> <br> But it's the price of gas that's really making his costs go up. Abdallah says he's now paying about 20 cents more a pound for the organic chickens he buys from Amish farms in Wisconsin, Michigan and Indiana. &nbsp;<br> <br> So in turn, Abdallah has to raise his own prices. But he's only increased his chicken price by 5 cents a pound.<br> <br> "We don't want to go up that much because right away, customers would notice that there's a big increase and then they'll be questioning, and then they might not come back again," Abdallah says. "So I'd rather lose a few cents a pound than lose a few customers."<br> <br> That calculation is something many businesses have to weigh.<br> <br> Chad Syverson is professor of economics at the University of Chicago Booth School of Business. He says producer prices, which are essentially wholesale prices, and consumer prices are correlated but don't move in lockstep. Producer prices have bigger swings up and down than consumer prices. He says it's something of a riddle why that is.<br> <br> One reason, Syverson says, is so-called "menu costs." The name comes from the cost restaurants bear when they actually have to print up new menus with new prices. But the idea translates to all businesses - there are costs involved in researching and setting new prices.<br> <br> Syverson says businesses decide to raise prices when they decide that their own higher costs aren't temporary.</p><p><img alt="" class="caption" height="437" src="http://llnw.wbez.org/story/insert-image/2011-April/2011-04-11/cpi v ppi smaller.JPG" title="Percentage changes in the consumer price index and the producer price index (University of Chicago/Chad Syverson)" width="638"><br> <br> We all know one area where higher costs seem to hit us right away - at the gas pump.<br> <br> That’s where we are this week for our Windy Indicator, getting a read on the wider economy from one little sliver.<br> <br> Are higher gas prices changing people’s buying habits?<br> <br> Yared Alemu manages a Shell station in Chicago’s Edgewater neighborhood.<br> <br> "Before, people filled up all the way," Alemu says. "Now they just give you 20 bucks, 30 bucks to fill up and that’s it."<br> <br> So are people driving less these days?<br> <br> Let us know how you're adjusting to higher gas prices - leave a comment at the end of this story.<br> <br> Next week, our Windy Indicator checks out the lamb shanks.<br> <br> <br> <br> &nbsp;</p></p> Mon, 11 Apr 2011 05:01:00 -0500 http://www.wbez.org/story/alliance-poultry-farms/venture-chicken-butchers-price-dilemma-84997