THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, May 26, 1996 TAG: 9605250678
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 140 lines
Prices on his gas pumps peaked six weeks ago, and George Bator's customers immediately sent a message.
The message came to the Greenbrier Citgo owner from all types of Hampton Roads residents: young, old, rich, not-so-rich. Drivers of gas guzzlers. Drivers of mileage misers.
Drivers told Bator this: they have a fixed amount of money to spend each week at his gas station and convenience store. If they need more money to buy gas, they have less money to buy other things. Beer, a quick snack, whatever.
After watching customers' spending patterns, Bator derived this theory: A rise in the price of a necessity like gasoline hits Hampton Roads residents squarely in the jaw, whereas it might only be a glancing blow to Richmonders, Washingtonians or New Yorkers.
The reason: Hampton Roads residents make less money on average than residents of other cities. The average per capita income of a Hampton Roads resident in 1993 was about $18,500, 11 percent below the national average.
``We're in an area that's pretty far down the food chain for average salaries,'' Bator said April 11 when gas prices had settled in about 20 cents a gallon higher than usual.
``When the prices go up, I think cities like ours feel the pinch much, much more than major metropolitan areas because that's a smaller amount of gross pay for them.''
Bator felt that pinch. The volume of gas he was selling plunged like the gas gauge on an old Cadillac. Prices had jumped about 20 percent. The amount of gas Bator sold dropped by 20 percent.
It's not fair to compare Hampton Roads to New York or Washington? People earn more in those cities, but everybody knows it also costs more to live there.
So, how about measuring it against 15 other cities in the Southeast that this region competes with for new industries?
Against cities such as Richmond, Roanoke, Greensboro, Jacksonville, Fla., Raleigh and 10 others, Hampton Roads ranked 15th of 16 in per capita income growth between 1970 and 1993, according to a study released earlier this year by the Hampton Roads Planning District Commission. Only Orlando had slower income growth.
``Growth'' may not even be an accurate word for income in Hampton Roads in the 1990s. The region's residents posted a zero ``growth'' of per capita income during the first four years of the decade, according to the study.
Per capita income is significant because it is considered the best ``expression of the economic health of a community and its standard of living,'' wrote John Whaley, economic services director of the planning district commission.
Per capita income may sound complicated. But the measure is simply the total income of a region's residents divided by the number of residents.
It shows both the quality of consumer markets and the economic well-being of an area's residents, Whaley says. So does the way people spend their money at a gas station. Whaley thinks Bator's observations are ``right on target.''
``For most of us, gasoline is a necessity of life,'' Whaley said. ``We need to get to school, work, shopping. We can't alter our travel patterns right away. We can only cut out other things - food, amusements, luxuries.''
Bator compares customers' reactions to this spring's run-up in gas prices to the stages of grieving. Each stage has manifested itself in different spending decisions by his customers.
First there was shock, followed quickly by denial. People couldn't believe gas was this expensive everywhere. They refused to fill up.
Some looked around for better prices. There were none. It kept going up. Bator had to raise his prices twice in one day. The next stage set in: resignation.
They had to fill up.
``It really doesn't matter to me, even though it is outrageous, because you got to do what you got to do,'' said Dee Rogers while filling his tank at Greenbrier Citgo this week. ``I got to do it, because I got to get back and forth to work.''
So people economize, either at the pump or somewhere else. Drivers this spring have ratcheted up their pattern of the past few years to save money by filling up with cheaper fuel.
In 1992, for instance, 55 percent of the gas Bator sold was regular and the other 45 percent was either mid-grade or premium. Now, three-fourths of the gas he sells is regular and the other fourth is the two higher-grade, higher-cost fuels.
That hurts gas station owners who make a slim 2 cents a gallon or so on regular gas, but make about 10 cents a gallon on the premium grades. Demand for regular fuel was so great this spring that Bator's distributor restricted his fuel deliveries to 3,500 gallons rather than the 8,500 gallons that a tanker truck can deliver.
``For about six weeks we were running out of regular gas, and when you'd call the distributor they said they had plenty of mid-grade and premium,'' Bator says. ``I said, `No kidding, it's a buck-50 a gallon.' ''
Greenbrier Citgo customers also have been cutting back on their purchases inside the store. People who had been able to take $20 and buy gas, beer and potato chips now are using most of the $20 to buy gas.
``People can't afford to pay for convenience right now,'' Bator says. ``What's suffered here most is beer. They probably are going to Food Lion where it's less. And that's what they should be doing.''
Reasons for this go deeper than just low per capita income.
The region is not built up like many East Coast cities, but sprawled out like Los Angeles. That means people drive farther to get to work, school, church, Little League.
Complicating that, public transportation is limited so there are few alternatives to driving. A New York, Baltimore or Washington resident could take a commuter rail line to work.
Add low personal income and Bator has a good argument. Although the region's per capita income is 11 percent below the national average - and heading lower, Whaley forecasts - it's not cheaper to live here.
The cost of living in this region is 99.9 out of an average 100 for 311 urban areas, according to the American Chamber of Commerce Researchers Association.
So the region's residents are making less money than if they lived somewhere else but not getting the benefits of a low cost of living. But why?
Probably because of all the reasons that have been hypothesized dozens of times. Retired military personnel can afford to work for less than others because of their pensions, and that drives down the wages others can demand. Also, the region lacks a base of big corporate headquarters, which means few high paying management jobs.
And there's a final paradox: Hampton Roads has a favorable mix of business and industry that should give it a solid wage structure, Whaley says. But it doesn't.
``We have noticed that today, pretty much across the board, local industries pay less than the same industries elsewhere,'' Whaley said. ``It may have to do with the kind of work we do in those industries.''
In other words, Hampton Roads is home to operations of some high-flying, technology-age companies, but those operations are not the type that pay well. Sometimes when this region lands ``a high-tech industry, we get the low-tech end of it,'' Whaley says.
Whaley sees the results of those trends in his numbers. Bator sees them at his gas station. Hampton Roads residents just have to look at their pay stubs. ILLUSTRATION: VICKI CRONIS color photos/The Virginian-Pilot
Ed Rich of Oil Transport in Chesapeake empties pooled gasoline from
a hose after unloading 6,500 gallons of regular, 1,000 gallons of
super unleaded and 1,000 gallons of unleaded plus at George Bator's
Citgo station in Chesapeake.
Curtis Brooks of Chesapeake finishes putting gas in his car. His
friend, Lavon Person, laughs as Brooks says of gas prices: ``Clinton
better hurry up and do something before he gets the boot.''
Gail Ferree of Virginia Beach adds a few gallons of gas to her
station wagon. She says the high cost of gas ``eats you up,
especially when you have a larger car.''
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