High Fuel Costs and Skiing
September 2, 2005
While the impact of high gasoline prices will impact getting to the slopes, the same high costs for all forms of energy will impact all aspects of skiing. Lift prices will have to increase to offset the high energy costs of making snow, keeping pools warm, heating lodges and hotels, etc. Some ski areas might not be able to recoup higher snowmaking costs and thus make less snow, making the ski experience less pleasant.
If fuel/energy prices continue to climb I would say that the jury is still out for the overall impact on mid-Atlantic skiing, but the outlook is less than rosey.
Colonel, I've been thinking about this and if we're paying a premium due to the disaster in LA MS AL, i've got no complaints. I figure it's the cost of being one nation, but if $3/gallon is just a stop on the way to $5/gallon, that's not so good. Fuel is $5.00 gallon in europe because they tax the hell out of it. PA gas tax is 0.37 gallon, WV iirc is 0.175, but at the pump, gas costs practically the same. Where's the other 0.20 going? That's what the market price is? Is 3.00 the point where people start to conserve or react to this?
The bottom line is....................90 DAYS TIL SKI SEASON
I was living in Athens Greece in Feb of 1981 when we got hit with a 7 Richter. After the quake the Greek government voted to slap a surtax on gas to cover the cost of rebuilding. They did the same thing in 1973 for a big quake in northern Greece. When the bills were paid the tax was rescinded.
I don't mind paying higher gas prices if I know part of the price I am paying is going to help the survivors of a catastrophe, but I get royally ticked at paying for record profits for the petroleum and refining multi-nationals. If the Bushies were smart they would sit on the petro/refin companies until they lowered the price back under $2 and then added a disaster tax of $.50 or so. I don't think anyone would mind paying that. It would be an easy way to cope with the suggested 30 billion or more that it will take to restore the area.
One final not so happy thought .. what happens when the next disaster hits? Gas goes to 5, 6, 7 bucks a gallon? What happens to our economy then?
Well, keep in mind that the price is an output of supply and demand, no one is physically controlling the price. And as far as the refinery industry goes, for most of the 1990s the profit margins were between -5 and +2 percent per year. A number of firms teetered on bankruptcy. A lot of the "surplus" profits that are being generated (prior to Katrina) wind up levelling off long-term profitability from near-zero to a reasonable rate of return of 5, 7, or 10 percent. If you tried to cap profits on refineries without guaranteeing a return during bad years, you'd wind up with serious disinvestment when oil prices fell, which would result in fewer refineries the next time there was a shortage, which would mean higher prices, which would be capped, which would result in... you get the picture. It'd be a death spiral.
If there really were surplus profits, the industry would be rapidly expanding. And in oil it is rapidly expanding. Refineries, it's not. Most refineries in Europe are still operating well below capacity so we're importing an increasing amount of refined products from there. Until prices level out between European refined products and Gulf Coast refined products, you're not going to see any new plants here. That said, you'll probably see capacity expansions after this storm (18-24 months from now) here in the U.S. as refineries cash in on their insurance to try to produce more gas in the high price market.
also remember, the gas shortages of the 1970's were the result of government price controls. let the price float and supply and demand will find equilibrium, perhaps one you don't like. it might not sound very fair, but thats the way it works. you can't just order the entire global supply chain to work to your policy, that's not the way it works.
if the oil companies really are in collusion to capitalize on the natural disaster, there are already laws against price fixing.
but, the impact on skiing could be lousy. skiing is already going upmarket in a huge, unforunate imho, way and this just further separates the haves from have nots. i wonder what airline tickets to denver will be in january?
ps: give generously to the relief agencies of your choice.