Fuel Prices Pumping Up City Food Costs

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The New York Sun

Look for pain at the gas pump to spread to the city’s restaurants, supermarkets, and fruit stands.

Meat lovers, for example, should get ready to shell out perhaps as much as 10% to 20% more for such popular items as steak, veal, pork chops, hot dogs, and hamburgers.

The price hikes — the result of rising fuel prices leading to higher transportation costs — will soon be arriving at city restaurants and supermarkets, according to Martin Weiner, the chairman of Atlantic Veal, the New York area’s largest producer and processor of veal products.

“Everyone knows inflation is driving food prices higher,” he says. “What they may not realize is that what’s taking place at the gas station will drive them even higher. Those higher fuel costs are a killer, and if you love meat, that love affair will soon cost you more. Restaurants and supermarkets won’t have any choice; they’ll have to raise prices.”

Sparks Steak House, one of Manhattan’s busiest beef restaurants, is seeing the pinch of higher fuel costs. It was hit a year ago with a fuel surcharge for meat delivery. Now, manager Sal Desai says, this surcharge, along with surcharges from distributors of dairy products, fish, and wine, is being raised. “We’re trying to keep prices down, but eventually, higher fuel costs will mean higher menu and wine prices,” he says.

Over the past two weeks, prices at the gas pump have ballooned, rising 16 cents nationally to a record $3.62 a gallon, with $4-plus prices conspicuous in many parts of the country. In some New York City gas stations, premium prices have approached $5 a gallon.

Gas prices overall have risen 63% over the past 18 months, and with oil topping a record $126 a barrel on Friday, it is likely to climb even higher. Each $1-a-barrel hike in the price of oil subsequently adds 2 1/2 cents a gallon at the gas pump. Last week, Goldman Sachs raised its oil price target to $200 a barrel.

A commodities-tracking analyst at Weiss Research in Jupiter, Fla., Sean Brodrick, citing mounting global demand and shrinking supplies in the face of declining production, expects $5-a-gallon gas to pop up in stations around the country during the upcoming summer driving season. “In 12 to 18 months,” he says, “$5-a-gallon gas will be as common as the air we breathe.” He said he expects $10 a gallon to follow in two to three years.

Mr. Weiner’s Atlantic Veal has six trailers that deliver veal products, each of which contains two 100-gallon tanks and an additional 50-gallon tank for freezing purposes. At the moment, the firm is paying a record $4.75 a gallon for diesel fuel, up about 76% from $2.75 a gallon a year ago. That’s nearly $1,200 to gas up each trailer.

Over the next two months, Mr. Weiner figures, these higher fuel costs will cause him to raise the price of his veal products some 10% to 20%, an increase he expects distributors to pass along to their restaurant and supermarket customers. They, in turn, will have no choice but to pass the increases on to the consumer. He said he believes that will occur in a matter of weeks.

“It’s a vicious price cycle, it’s only going to get worse, and it goes well beyond meat,” he says. “You’re going to see higher prices for all kinds of food and you’re going to see them nationally.”

John Catsimatidis, the chairman of one of the city’s leading supermarket chains, Gristedes, concurs. He says he sees higher gas costs as one of several catalysts that will push up food prices 8% to 10% over the next six months.

Other factors, Mr. Catsimatidis says, include rising commodity prices, the weak dollar, and the government’s decision to mandate that a certain amount of the corn crop be used for ethanol production.

He’s not alone in his vision of higher food costs. One East Side peddler of fruits and vegetables, Abu Al-Zhaari, who uses a van to transport his stand and products, also gripes about higher fuel costs. As a result, he’s raising some prices 20% to 25%, and notes that a number of his fellow stand operators are doing the same thing.

Included among Mr. Zhaari’s price hikes are tomatoes, which are now $2.50 a pound, a $0.50 increase. He has also boosted the price of a box of blueberries to $3 from $2.50. “I used to sell bananas at five for a dollar and sometimes throw in an additional one free. Now, we sell them at four for a dollar, and no more free ones anymore for anyone.”

dandordan@aol.com


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