Experts: As long as gasoline supply holds up, locals will pay the price

Wednesday, Aug. 17, 2005 | 10:45 a.m.

Despite the soaring gasoline prices in Southern Nevada, economic trends indicate that unless the actual supply of fuel becomes a problem, people will pay the price at the pump and keep their gas-guzzling vehicles, some Southern Nevada experts say.

Drivers in Nevada were paying an all-time high of $2.67 per gallon of regular unleaded gasoline on Tuesday statewide, a new report from AAA Nevada said.

It will take a gallon of gas selling for $3 or more before motorists feel the same pinch at the pump that they did in 1980, adjusting for inflation, said Keith Schwer, director of the UNLV Center for Business and Economic Research.

World demand for more oil, especially in China and Indian, and the U.S. war policy in the Middle East, which Schwer called "a wild card," are all contributing to rising fuel prices.

Also, gas guzzling around the world is driving up the price of gasoline, Schwer said.

"When I go to buy a new car, I'm not going to buy a Hummer," Schwer said, claiming that the auto industry has been "asleep at the wheel" when it comes to developing more fuel-efficient vehicles.

A crucial indicator to watch for that could adversely affect Las Vegas and its tourist-based economy will be gasoline's availability, Schwer said.

If an oil shock similar to the one that hit Southern Nevada in 1979 , creating a climate of gasoline scarcity, "then you'll see a substantial impact," Schwer said.

As long as gasoline prices increase gradually, most people may complain, but they will keep filling up, he said.

"If prices stay high and continue to increase, then people will get the message and start to conserve," Schwer said.

Michael Geeser, a spokesman for AAA Nevada, said on Tuesday consumers were paying 16 cents more per gallon of gas statewide from a month ago and a "whopping" 65-cent increase from a year ago.

"There's no reason to believe that prices will fall," Geeser said, even though the three-day Labor Day weekend -- traditionally a signal for summer's higher gas prices to start falling -- is a little more than two weeks away.

No one can predict what the price of a gallon of gas will be come September, but typically after the Labor Day weekend fuel prices drop, Geeser said. That trend may not happen this year.

"These prices are the highest Nevada residents have ever paid," Geeser said of the latest increases.

The highest prices have been found in North Las Vegas and Carson City, where motorists shelled out 17 cents more per gallon of regular unleaded gas over last month, the largest one-month increase found in the state, Geeser said.

The least expensive gas in Nevada, on average, is running at $2.51 a gallon in Elko.

Terrorist attacks in London this summer gave oil bidders the jitters and pushed the price of crude oil to $66.08 a barrel late Tuesday, Geeser said.

Along with continued conflicts in the Middle East and elsewhere in the world, gas prices may not go down soon, he said.

Hurricanes churning toward the Gulf of Mexico in the last two months further helped to drive prices up, Geeser said, noting that U.S. oil refineries built more than 25 years ago are in the path of stormy weather.

The nationwide average price is $2.52 per gallon, up 20 cents from a month ago, the AAA Nevada report said.

The most expensive gas in the United States reached $2.95 a gallon of regular in Wailuku, Hawaii. Within the lower 48 states, the most expensive average this month is in Eureka, Calif., where a gallon goes for $2.91. Least expensive is $2.31 per gallon in Casper, Wyo.

Studies across the country earlier this year showed more people traveling than in 2004, Geeser said. Travelers took to the roads this summer on average by a 1.2 percent increase, he said.

But motorists may soon trim their trips and start shopping for more efficient cars, he said.

"We are concerned about the impact this situation is having on consumers," Geeser said. "When gas prices increase this dramatically, it puts a significant strain on the consumer, especially people who are already struggling to pay their bills."

So far the higher fuel prices have not hurt local SUV and pickup truck sales, said 30-year auto sales veteran David Little.

"We've just had two of our biggest truck sales months ever," said Little, general sales manager at Douglas Nissan in the Henderson Auto Mall. He estimated 40 percent higher sales this summer over last year.

Between improved engines and an aggressive ad campaign, new truck sales are steady despite higher gas prices, he said Tuesday night.

"A few people trading in SUVs mentioned higher gas prices, but nothing out of the ordinary," Little said.

Rising gas prices in Las Vegas aren't keeping motorists away this summer, according to John Piet, a researcher with the Las Vegas Convention and Visitors Authority.

"We don't have any research that suggests we're being affected," Piet said Tuesday afternoon.

Through June the Las Vegas occupancy rate was 2.7 percent above last year's, said Piet, who did not have more recent occupancy figures.