Business owners start to see red as gas prices soar

04/18/2011 3:15 PM |


As the price of regular gas hits $4 per gallon this week, business owners all over the North Fork are staring head-on into an economic reality that promises to cut into their profits.

Bob Van Bourgondien

Bob Van Bourgondien runs his family’s wholesale flower and garden greenhouse business in Peconic. He’s planning to switch his three acres of greenhouses from glass to double-walled carbonate over the next seven years because his heating bills soared 25 percent this past winter.

“I’m just glad the winter is over,” he said.

“Over the years, I’ve been doing upgrades with all the fuel innovations; we’re twice the size with less fuel,” he said.

Even though he doesn’t heat the greenhouses this time of year, he still needs to keep four trucks on the road every day delivering plants across Long Island, and their fuel bills are eating into his profits.

Mr. Van Bourgondien has looked into alternative energy sources, but a wind turbine on the scale he would need would cost about half a million dollars. Putting solar panels on the roof of his greenhouses would block light and make it impossible for the plants inside to grow properly.

“I could put them on the field in front of the greenhouses,” he said. “Solar panels have come down in price, but you still need subsidies. The technology isn’t there yet.”

Stuart and Therese Kogelschatz

Stuart Kogelschatz and his wife, Therese, own White’s Hardware on Main Street in Greenport. He thinks his inventory is as low as it’s ever been. The reason? Vendor fuel surcharges.

Mr. Kogelschatz said he likes to adhere to the business principal of “just in time,” keeping his inventory fresh by ordering small quantities of products on a regular basis.

“In hardware, we have a lot of diverse items. We can’t buy a lot of everything,” he said.

But in the past month, his vendors have informed him they’ll be adding freight surcharges of 15 to 20 percent. And some of those vendors, he said, never dropped the surcharges they added in 2008 after the last big spike in fuel prices.

The result is that he needs to take a loss on heavy items like nails, and bulky, cheap items like Rubbermaid containers that may be lightweight but take up a lot of room in shipping trucks.

“If I had a jewelry store, I could factor the price of shipping in, but it doesn’t disappear quickly on the price of a commodity,” he said. “Sometimes the market sets the price, like with batteries, which are very competitive. We’re just eating it, taking a loss.”

Mary Bess Phillips

Alice’s Fish Market owner Mary Bess Phillips expects that fuel prices will put local fishermen in trouble when they start the season next month, but she said that she’s already seen foot traffic slow down in Greenport since gas prices began to spike.

“It has hurt all of Greenport. Fridays would be busy, but in the last few weeks it has dropped more dramatically because people aren’t coming in,” she said. “Usually, people like to come out and roam around, but I’m seeing less traffic on the street, especially when I go downtown.”

Ms. Phillips said her husband, an offshore fisherman, buys diesel fuel in New Bedford, Mass., because Massachusetts discounts fuel for fishermen at the pump, while New York requires them to file paperwork with the state to get a refund.

“Meantime, the price of fish doesn’t go up,” she said. “Last year, the fishermen were squeaking about the price of fuel. This year will be worse.”

Andrew Galasso

The sales manager of Larry’s Lighthouse Marina in Aquebogue, Andrew Galasso, said that this year’s high gas prices come just after the marina was required by the Suffolk County Health Department to rip out its old gas storage tanks and put in new, double-walled tanks at its fuel dock.

The marina will be paying for that upgrade for the next 20 years, he said. On top of that, boaters pay an extra 50 cents per gallon in taxes over the cost of the same fuel at gas stations. Mr. Galasso expects boaters to be visiting the gas dock less frequently this season.

“People make shorter trips when gas prices are high. Instead of Block Island, they’ll go to  Shelter Island,” he said.

Though he hasn’t yet seen many people trade in bigger boats for smaller boats or switch to sail power, he said, “We’ll see how long these gas prices last. That’s what happened in the late 1970s, with the oil embargo.”

Outside at the fuel dock, Joe Pernal of PJP Petroleum was filling the storage tanks. He said people were giving him a hard time about high prices everywhere he went.

“Everybody calls it liquid gold, but it doesn’t affect me,” he said. “My salary stays the same.”

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