Falling Gasoline Prices Impact Goods and Services

One of the first businesses to feel the pinch of higher gas prices was Advanced Courier Concepts in Santa Ana.  Since gasoline is the lifeblood of the delivery business, when gas prices shot up, Advanced Courier Concepts, got hit hard.

Manager, Dirk Keck says the drivers were the first to address the problems, especially the ones who were driving their own vehicles.  To help them compensate for nearly doubly the cost of gas, Advanced Courier Concepts instituted a fuel surcharge on every delivery.

Keck says when the first surcharge in 2005 was eight percent of the delivery cost.  When gasoline was at its highest the surcharge peaked at seventeen percent.  Since gasoline prices have fallen, the surcharge has also fallen to 11 percent, and by December the company hopes to drop it even further.

That’s just one service company that’s been able to pass the gasoline savings on to its customers.

U.C. Irvine Economics Professor David Brownstone says it will take longer for most consumers to see any other price breaks from lower fuel prices:

"They will start to drop depending on how fuel intensive things are.  The Airlines, which are probably the largest portion of their costs are fuel, they're going to drop.  They're already dropping."

Brownstone says retailing will be slower to respond.  Merchandise that's in stores now was shipped earlier in the year when transportation costs were higher.  He also expects a lag at the grocery store.

Ultimately the biggest impact of lower fuel prices is still at the pump.  Brownstone figures the average family in California uses twelve-hundred gallons of gasoline each year so a one-dollar-a-gallon drop immediately gives each family a bonus of twelve-hundred bucks. 

"That's actually considerably bigger than they got from Bush's tax stimulus check," Brownstone said.

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