Pinched at the Pump
Stopping for gas on a recent evening commute, Joseph Godino paused to make a call before feeding his credit card into the pump’s built-in reader.
He listened as a recorded voice delivered welcome news: His card still had $88 of credit available.
The gas-up was a go.
“I had to phone up to find out if I had enough credit on there to fill up,” said Godino, 58, whose workday round-trip commute is a whopping 200 miles.
“The gas is just really hurting me. I don’t know what to do.... I can’t quit my job or I’d lose my house.”
Godino, an Apple Valley resident whose truck driving job is based in Buena Park, signed up for extra shifts and financial counseling, and his wife went back to work to add income. But he has fallen further behind. With his gas cards maxed out, Godino has switched to filling his tank using a Visa card.
California’s sky-high gasoline prices are slamming Godino and other motorists who had been barely getting by. Californians, saddled with the nation’s priciest gasoline outside of Hawaii, are paying more than 70 cents a gallon extra compared with a year ago and nearly $1 more than two summers back.
The wallop is worsened by interest rates that are at their highest levels in more than five years, boosting adjustable-rate mortgages and credit card bills and jacking up the minimum payments on most credit cards.
Economists largely have shrugged off the financial effect of higher fuel costs on consumers. They say that gasoline demand and road vacations continue to rise and that today’s pump prices only recently approached the record-high retail prices that forced drivers to pay the inflation-adjusted equivalent of $3 a gallon for gas for a short time in 1981.
But as Godino’s plight illustrates, the fiscal fallout already is showing up at the lower end of the wage scale. And anecdotal evidence suggests that high gasoline costs are forcing people to make adjustments at nearly all income levels.
That’s especially so in California, where long commutes are the norm and public transit is of little use to the masses who in recent years moved ever farther from their jobs to find affordable housing.
“For some people, their cost for gas has doubled in a short amount of time,” said Susan Ulaga, senior vice president at Consumer Credit Counseling Services, a California nonprofit. “People are able to shift money around for a while, but eventually the credit card limits kick in ... and once that credit is used up, they are saying, ‘What do I do now?’ ”
A growing number of them are heading to pawnshops, said Mike Robinson, a co-owner of Orange Pawnshop in the city of Orange.
About 10 times a week, a customer says, “I just need money to get gas until I get my paycheck,” Robinson said. “It’s something that you really didn’t hear about before.”
Margaret Vieyra, 41, paid a visit to Buena Park Pawn on a recent Friday with her daughter in tow, offering a DVD player for some cash to buy gasoline. Owner Dale Roach rejected it, explaining that only dual players -- with DVD and VCR capabilities -- have value in his shop these days.
Disappointed, Vieyra took back the DVD player and put five DVD movies on the counter. The transaction left Vieyra only $5 richer.
Her friend Sal Hinostroza was outside waiting behind the wheel of a Toyota Camry. The engine was off to save fuel.
“Right now, my gas tank is on double-E -- the tongue of my gas tank is hanging out,” Hinostroza said. The immediate goal was to buy enough gas to get to nearby Stanton, where Vieyra’s son was at her mom’s house waiting to be picked up.
As the trio left Roach’s place, Hinostroza said they were going to another pawnshop, hoping to get at least $20 for the DVD player. “Then we’ll get gas and go get her son.”
Roach said his own gas bill rose so much that last year he bought a more fuel-efficient car for his daily 50-mile commute. He acknowledged that his new car, a gray Toyota Scion that gets 32 miles per gallon, required some adjustment for a man used to driving a bright red Ford F-250 pickup with flames on the sides.
“On the freeway, I get no respect,” he said with a sigh.
The change from a truck that got well under 20 mpg was prudent, because California’s average gas price for self-serve regular has stayed above $3 a gallon for almost three months. A little more than a year ago, the statewide average was less than $2, but drivers’ sense of normalcy has shifted so much that many now consider anything close to $3 a relative bargain.
The cumulative effects are showing up almost everywhere.
Transportation or fuel surcharges are being tacked on for deliveries of flowers, packages, employee uniforms and more. Pool cleaners are raising prices or dropping customers who live too far from their other jobs. A San Diego Merry Maids operation is rearranging customer cleanings to cut the gas bill for crew members.
Even the mini-fridge that Jennifer Root recently set up in her office has a gas price connection.
Root, who works for ByDesign Financial Solutions, added the appliance to cool cans of diet cola because the snack and soda machines were yanked last month from the City of Commerce office building where she works. The vending machine owner, citing high gas prices and other costs, said the 60-plus staff members there didn’t consume enough to make the site worth tending.
A recent survey for the National Retail Federation found that 42% of households with incomes of less than $50,000 were dining out less frequently because of high gas prices and that 33% with higher incomes had cut back on eating at restaurants.
Less than 25% of the 7,388 people polled in May said that gas prices were having “no major impact,” down from last year’s 33.8%, the retail group said.
The pressure on household finances is showing up in higher credit card delinquencies, the American Bankers Assn. said. Late payments to credit card companies rose to 4.4% in the first three months of the year -- a reversal from six months of declines.
“Gasoline prices are clearly taking a bite out of the consumer, especially among people who are at the margin,” said Keith Leggett, the bank group’s senior economist. “That’s why we’re seeing an uptick in the delinquency rate, even though the economy is good.”
Godino, the Apple Valley truck driver, can vouch for that.
He tried to refinance his mortgage earlier this year, but it fell through after he had shelled out a $400 appraisal fee and used the monthly mortgage payment to whittle down credit card debt. Suddenly behind on his mortgage, Godino saw his monthly payments balloon to $2,300 from $1,800 to make up for the deficit and stave off foreclosure.
“I’ve never been behind like that,” said Godino, a Vietnam veteran who has spent 38 years as a truck driver.
He moved to the high desert two years ago because he was unable to afford a home closer to work. At the time, Godino’s Volkswagen Beetle was getting good mileage and his employer, Oak Harbor Freight Line, was talking about opening a terminal near Apple Valley.
But the Volkswagen got totaled in an accident, forcing Godino to commute in his less-thrifty Ford Ranger pickup. His monthly fuel bills have jumped to $650. And so far, Oak Harbor hasn’t opened that inland terminal.
“The commute is killing me,” he said. One oil company credit card has a balance of more than $1,000. His wife cut up the other one.
“There’s more money going out than coming in,” Godino said. What’s more, the Oak Harbor terminal where he works is moving to a larger site in Montebello at the end of July.
“It’s farther,” a dejected Godino noted.