Sticker shock
Fuel costs are driving prices up across the board

By Terry Scruton
Senior Writer

While truckers certainly know firsthand the cost of high diesel prices, the rest of the country is beginning to feel the effects as well. 

Recent numbers issued by the U.S. Bureau of Labor Statistics suggest that the country could soon see a sharp jump in food prices thanks to increasing transportation costs. 

Farmers and ranchers spent about $6 billion in energy costs in 2003 and 2004, according to the bureau. And while food prices in general have risen less than 2 percent in the first quarter of 2005, the cost of fruits and vegetables rose nearly 17 percent in 2004. 

Though some of that rise was because of weather problems in major growing areas such as California and Florida, experts predict fuel-related increases could happen as soon as this fall.

Some food companies have already begun to raise their prices. Campbell’s Inc. recently announced a price increase of nearly 5 percent on several of its product lines to help defray the cost of fuel. 

And the crunch goes beyond just consumer goods. Local and state governments and school districts across the country have begun increasing budgets for fuel costs for public transportation and school buses, which in turn could lead to higher taxes to make up the difference.

And a recent survey conducted by The Associated Press and AOL News found that 41 percent of those questioned had changed their vacation plans for this summer in order to stay closer to home.

Airlines have been feeling the sting as well. Nearly all of the major airlines have been posting first-quarter losses, with many of them blaming the increased cost of fuel. 

Atlanta-based Delta Airlines reported a nearly $1.1 billion first quarter loss. Bankrupt U.S. Air continues to hemorrhage money, having lost $427 million since last September. The company reported that it spent $368 million on fuel in the first quarter, nearly 58 percent more than the same time period in 2004.

This, in turn, has led to many airlines raising their fares. American Airlines, for example, recently announced it would increase fares by $5 for one-way trips and $10 for round trips.

It’s hitting other industries as well. Goodyear has announced price increases on tires to offset fuel costs, and Bridgestone Corp. said it will raise prices in June by up to 8 percent, including truck, bus and construction equipment tires.

In the midst of it all, the oil companies have reported staggering profits for the first quarter, while big companies in the trucking industry have reported healthy gains as well.

J.B. Hunt reported $709 million in total operating revenue for the first quarter of 2005, compared with $618 million for the first quarter of 2004.

And C.H. Robinson Worldwide Inc. reported first-quarter net earnings of $41.8 million, up from $29.1 million a year ago.