Local businesses feel the pinch as gas soars above $4 per gallon, with consumers expected to see higher prices as a result

It’s fairly typical for Skewers food truck owner Mirak Kazanjian to travel around the Spokane area for catering events.

But skyrocketing gas prices will likely change how Kazanjian operates his mobile business.

“The benefit of the food truck is we get to go to events where the people are, but obviously with the rise in gas prices, it makes things a lot trickier,” he said, adding a significant source of income comes from events held on the outskirts of Spokane.

“I usually wouldn’t charge a drive fee, but now every mile is costing me dollars, so it’s going to definitely change how we do business – whether we have to do less traveling or pass that on to the consumer,” he said.

The national average price for a gallon of regular gas reached an all-time high of $4.17 Tuesday, shattering the previous record of $4.11 per gallon set in 2008, according to AAA.

The spike in gas prices comes as President Biden announced a ban Tuesday on imports of oil, natural gas and coal from Russia in response to its invasion of Ukraine.

In Spokane, the average price Tuesday was $4.13 per gallon of regular gas and $4.53 per gallon for diesel, according to AAA. The all-time high for regular gas reached $4.19 per gallon and $5 for a gallon of diesel in July 2008.

Rising gas prices are a double whammy for Kazanjian, who is also contending with an uptick in food costs.

In the past, Kazanjian navigated rising fuel costs by filling up the food truck’s diesel tank when there’s a slight drop in prices. With prices exceeding $4 per gallon, Kazanjian said he may consider driving the food truck to events closer to one another and reducing trips to North Idaho.

“We are over $4 (per gallon) at most places already, compared to paying under $3 last year, so it’s definitely noticeable and it does make me think how much I’m filling up and what events I take on,” Kazanjian said.

Local taxicab drivers are also feeling pain at the pump.

Advanced Transportation Taxi and Shuttle Service owner Al O’Grady said he’s noticed a significant rise in gas prices as the cost to fill up his gas tank has increased more than $16.

“There’s nothing I can really do except pass the cost along to customers,” he said. “I’ve been absorbing it up to this point, but since the new (Biden) administration has come into office, fuel prices have nearly doubled. I paid $3.99 a gallon today and I’ve seen it as high as $4.39 a gallon.”

O’Grady said while he supports the nation’s decision to issue oil and gas sanctions for Russia because of its invasion of Ukraine, it’s disappointing that consumers will feel the impact of rising prices.

“Prices are rising for everything. Even insurance went up this year,” he said. “I can’t even find motor oil. If I have to do an oil change on my vehicle, it takes 5W-30. It doesn’t matter where you go, there’s not a lot of it out there.”

Washington Trucking Associations board chair Dale Lemmons said most trucking companies in the state have what’s called a fuel multiplier, meaning fuel prices can fluctuate for a current month, dependent upon what the cost was in the prior month.

“When that multiplier catches up, we are certainly aware of what the impact is to our customers,” he said. “That increased pricing hurts their margins and, ultimately, they will pass that on to the consumer, which will be impacted the most.

“We continue to look at all of the options we have available to be more efficient and this is no different,” he continued. “We also see the impact on our communities and workforce as well. We hope that there is going to be some resolve to this. We would love to see the U.S. be more energy independent, meaning converting to some alternative fuels and trying to get some more supply.”

Avista Corp. Chief Economist Grant Forsyth said the impact of rising gas prices on the local economy is twofold.

Households feeling the pinch of higher energy and gas costs may opt to adjust their budgets and reduce spending on dining out and recreation. Businesses could be faced with a decision to raise prices or absorb added costs, Forsyth said.

“The other problem is petroleum,” he said. “There are a lot of petroleum products that don’t necessarily go into a gas tank, so firms having to buy inputs that are petroleum-based in some way are going to be in the same position.”

Inputs are resources used to create goods and services.

The region is experiencing higher than average inflation compared to other parts of the nation due to rents and housing prices, further compounding the impact of rising gas prices on residents, he said.

“This hits the farming community pretty hard,” Forsyth said. “Fuel costs are a big part of their cost. This is going to cut into the farms that incidentally got hammered last year because of the heat dome.”

Natural gas futures contracts on the Chicago Mercantile Exchange as of Tuesday afternoon indicated fuel prices are likely to exceed $4 a gallon through the summer, Forsyth said.

The Chicago Mercantile Exchange is a global derivatives marketplace. A natural gas future is a contract that obligates buyers to purchase a specific quantity of natural gas at a predetermined future date and price.

“For car travel, we are looking at $4-plus for a gallon of gasoline through most of the warm months,” Forsyth said. “That is what the market is signaling right now. But that could change if the market changes or there is resolution in relation to Ukraine.”