Something Completely Different

My humble apologies for the lateness of my February message. Other than being really busy, I have no excuse. But, in any event, the month isn’t over yet, not quite, so here goes!

Most months I use this forum to talk about something related to the Hospitality Industry, and this month is really no exception, since the topic has quite an impact on travel. But instead of talking about great service or some other pertinent topic, this month I am going to offer some perspective on gasoline prices. Yep, that’s right, gas prices. We all have to deal with them, and everyone has an opinion about whether they are too high. The quickly approaching summer promises to be the most economical for travelers in a long time. Good news for Hospitality no doubt. Gasoline prices are at levels that we haven’t seen in a long time. The oil companies and Wall Street would have you think that oil prices are too low, and in fact the downward spiral in oil has had a seriously negative impact on the stock market. My question is “why”? Certainly, lower oil prices will generate more car travel. Airline ticket prices are more reasonable then in recent memory. The oil that becomes the myriad of plastic things we use in our everyday lives is cheaper, which keeps lots of prices down, including shipping prices, since all those trucks and trains burn fossil fuels. So, who exactly is the downturn in oil pricing hurting? It would seem that it is primarily the oil companies, and I just don’t think that anyone should lose much sleep over that. They weren’t worrying much about us when we were struggling with near $5 a gallon gas pricing a couple years ago.

Some perspective might help. I have this really nice financial calculator that I bought for one of my graduate Finance classes, made mostly from plastic by the way. That plus a little quick Google research produced some fascinating trivia. I started with a look at gas prices in 1971, because that’s when I started buying gasoline for my folks 1967 Plymouth, which I got to borrow occasionally. Gas cost about 36 cents a gallon back then. The average inflation rate over the 45 years since is 4.14%. Based on that rate of inflation, gas should cost $2.23 per gallon today, which isn’t far off from reality here on the West Coast, where I live. So, based on my extensive 15 minutes of research, all is well!  Things are just as they should be.

So, what are you waiting for? Get in your car or on a plane, train or boat and go somewhere this summer! The great deals won’t last forever!