One American's View on $4 Gas
Principles of the Stock Market

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Have You Seen This?

Have You Seen This?

ECONOMIC VIEW.  One American’s View.  Yep, Mine!  With a bear market upon us, and myself and hopefully my readers all with hunkered down investment portfolios which thus don’t need constant care and attention, let me turn the spotlight on one American’s new travails, resulting views & future plans.


Travail.  I borrowed Lucy’s car to drive out over the mountain to play golf at the Hudson Valley Resort (VJ Singh recently bought an interest in the resort, for you golfers out there) for the Tuesday night golf league this week.  And then borrowed it again to go take my nightly swim at the Ulster County pool last night.  My car’s being temperamental, some type of under the dashboard wiring issue which cuts off the engine, I’m taking it in on Saturday.  Anyway I like to put gas in her car when I use it.  At  $4.21 a gallon I figure gas is not cheap anymore and I don’t want to short Lucy.


View.  Thus, figuring gas mileage in my head and how much it costs to drive, say 40 miles, I started thinking about what today’s higher gas prices reverberate, they are about double last summer.  Means less people driving and everyone taking shorter and fewer trips.  The county pool, for example, about three miles out of town, has been quite empty this year.  Thus I see much higher gas is going to hurt tourist stops such as Lake Placid, NY and Lake Tahoe, CA/NV.  Already we’ve rebooked twice, at lower prices, at the casino/hotel we’re staying at in Lake Tahoe.  Must be many fewer people driving there from San Francisco and the rest of California, especially with California having the highest gas prices in the nation, about $4.60 last I heard.  I can sure understand why.  We’ve driving a SUV from San Jose to Lake Tahoe (between four and five hours) and Lucy’s best friend who we’re visiting in San Jose says the total gas price may cost us $80.  I figure double that by the time we take the three hour drive around the lake once or twice, billed as the “most beautiful drive in America,” by the way.  And maybe go see Squaw Valley (where the Olympics were once held) and maybe Reno too.  Our visit wasn’t going to be cancelled just because gas prices have doubled since we planned this vacation.  But today’s gas prices will be factored into our future trips, surely, knowing myself.  Yep, Americans plans in general will be wound down or changed slowly.  Planning now has to include gas prices as parties and family get-togethers can’t place everyone under big cost pressures. 


Future.  Thus I see higher gas prices really having long, negative coattails for business.  All those convenience stores along major highways, all the tourist towns including New Paltz, all the recreational destinations, like Las Vegas, Disneyland and the various small businesses surrounding, all will see fewer people and thus lower revenues.  This winding down of travel and changing of plans will be a major issue. 


Schwartz View:  Bottom line, as bad as being asked for new financial discipline and sacrifice, this process is exactly what America needs.  For our longer term health and global competitiveness.  Unhappily this sacrifice is being forced on us but likely America and Americans wouldn’t cut our deeply ingrained, bad overspending habit any other way.  Spending less and saving more has been the needed antidote for our economic stresses for many, many years.  Thus I can’t wait to turn bullish on us as America gets back on the right track.  That’s one reason my first choice of books to take and read on the planes and during the three hour waits in two airport terminals is long range forecasters predicting bullish happenings ahead.


Posted 06-26-2008 8:56 AM by Richard Schwartz