The NEWS with Tim O'Callaghan

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Tuesday, January 20, 2009

Reality checks for a new year

This first published January 15, 2009 in the Henderson Home News, a Community Newspapers of Nevada publication.

Most things in life tend to be cyclical. A good example is the price of a gallon of gas. I’ve always had my own theory about the price of gas and why it goes up and down at certain times of the year.

One theory is that gas gets cheaper in the fall, around the end of October, because this is when the holiday season begins. If gas prices are high, shoppers tend to be tighter, and if this remains true on Black Friday, then gas prices begin to fall even more.

Then miraculously, the prices begin to rise the first week of January, continuing through March. Then in June, the summer march to the top of the price tolerance begins. This past year was a perfect example of that theory, but remember it’s only a theory with no scientific basis to stand on.

The increase in news reports about the rise in gas prices prompted me to reflect on the past year, so I scoured through all my columns and blog entries for a reality check. These columns are available at tocomv.blogspot.com.

Here is what I pulled from the recent past.

April 3, 2008

I wrote:

“For the past six months, I’ve been driving a hybrid that averages 46 miles per gallon and costs about $26 to $30 to fill up. Occasionally, I drive the Big Red Truck for short trips to the hardware and lumber store or to run a quick errand.”

Reality check

I filled it up this past Monday for just over $16 and was happy as can be about it.

I wrote:

“I pulled into the gas station, stuck the nozzle in the receptacle and walked away to give a little TLC to my abused truck by cleaning the windows and wiping down the interior from an accumulation of dust and yellow pollen. After a few moments, I heard the ka-chunk of the nozzle shutting off, giving me the cue to finish up. A quick glance at the pump stopped me in my tracks. I blurted out an, ‘Oh my gosh,’ or something like that, staring at the $93.81 displayed on the pump. I was caught in a sort of ‘Pump Paralysis’ — downright denial or disbelief.”

Reality check

For the most part I have continued to drive the Prius. However, I have driven the Big Red Truck a bit more with the drop in gas prices, but I’m reminded by my bride that it is more cost effective to take the Prius.

I wrote:

“I have to wonder how long will it take before the rising cost of everyday products due to fuel costs overtakes the value of the dividend check and will finally sink in? Profiting from stock investments is not a crime — it is capitalism at its best.”

Reality check

Respectively, it didn’t take long for more folks to complain about the price of groceries. However, did you notice the price of groceries going down with the price of fuel? Uh! I didn’t either.

May 29, 2008

I wrote:

“For years, we have enjoyed less expensive gasoline in our northwest Arizona getaway, primarily because there are fewer local taxes added on than in Clark County, which has plenty.

This was true until this past Memorial Day weekend, when the gouging began. The week before, I had checked our only local gasoline retailer in Arizona, and the price was $3.67 per gallon. Imagine my shock over the weekend when I went to fill two 5-gallon gas containers and the price had jumped to $4.19 per gallon. Heck, that’s 10 cents more than the notoriously high-priced Chevron station across from the Hacienda Hotel between Boulder City and the Hoover Dam.”

Reality check

I still avoid purchasing gas at my local Arizona station, even though I think someone came to their senses and lowered the price. However, I still purchase a few staples there.

Also, the price of gas at the Chevron across from the Hacienda actually fell into line for a while, when prices bottomed out but is now moving up above pace.

Nov. 6, 2008

I wrote:

“Now that the election is over, we can turn our attention back to daily life and economics. One of the most interesting items to speak of is the price of gas. This fall marks the sharpest decrease in prices at the pump in four years.

“According to GasBuddy.com, in December 2004 the average price of regular grade gas in the Las Vegas area was $1.81 per gallon. During the next 3 1/2 years, until June of this year, prices bounced up and down to an all-time high average $4.26 per gallon.

“Since then, the price has dropped an amazing $1.71 to its lowest average since March 2007 at $2.55 and is still dropping.

“I’m no expert, but I would bet the price of gas will start an upward trend sooner rather than later, even if we continue to reduce our consumption in the U.S.”

“Personally, I will continue to reduce consumption whenever possible by planning local errands, fewer trips out of town, carpooling and driving the hybrid whenever possible.”

Reality check

The price of gas has started its trend upward, how high no one knows. Consumption increased with lower prices, but I think the overall economy is keeping us from over indulging.

On the home front, as I mentioned before, we are still keeping our household consumption down and using the savings to offset rising costs of everyday life.

Prescient posting

Coincidentally, while going through last year’s columns, I rediscovered a posting from my blog that may very well explain how Barack Obama was elected. Not exactly, of course, but it could have been a symbolic tossing of the tea leaves when it was sent me by a reader named Pete.

TIM:

I read your article in today’s paper. I suffer from the same problem you have, filling up my Lincoln Navigator and my Sea Ray boat. We differ in the reason for why we are so “dumbfounded.”

I believe it is large part due to oil speculators and greed for profits. I watched yesterday’s hearings on oil and why the oil company’s profits are so high. Naturally, they insisted that they needed the huge profits and basically offered no solution for lowering gas prices. I watched, hoping a senator would ask questions about the price of gas and relate it to prices in the ’70s, ’80s, ’90s and three years ago. No one did, and no one asked why gas outstripped the rate of inflation.

The price of oil is high not because I drive my Lincoln Navigator 100 miles in a month or use my boat two to three times a year. It’s due to lousy speculators that the government doesn’t want to control. You can suggest that I change my habits, but the result will be immeasurable as far as lowering the cost of oil.

Find the right person or business to point the finger at, but blaming the individual misses the mark.

I joke with friends that the presidential candidate who promises $1.99-a-gallon gas will get my vote. As a staunch Republican, voting for a Democrat would be very difficult, but give me gas back at $1.99, and they have my vote.

Thanks for listening,

PETE FERRELL

I don’t think we can credit lower gas prices for getting Obama elected, but doesn’t it raise an eyebrow when you consider the timing?

Conspiracy theories aside, perhaps, in reality, it’s just another cycle in the economy.

Tim O’Callaghan, co-publisher of the Home News, can be reached at 990-2656 or tim.oc@vegas.com. He writes a regular column for the Home News.