Hike in oil prices could hurt tourism

Denny Freidenrich

The combination of foul winter weather, questions about OPEC

production, and a weaker than normal dollar are fueling another

run-up in oil and gas prices. Earlier this week, the price of crude

hit an all-time high of $57 a barrel and climbing.

It is so serious, industry experts like T. Boone Pickens, the

Texas oilman who created Mesa Petroleum, and John Cook, the head of

the petroleum division of the Energy Information Administration, are

beginning to ask the question: Is $60 a barrel for oil on the

horizon? If so, will $3 a gallon for premium be next?

All the tea leaves are pointing in this direction. If it happens

in the next several weeks, I predict fewer tourists will drive to

Laguna this summer, families will have to rethink their European

vacations, and Thursday evening surf outings to San Onofre may need

to be moved to Anita Street.

Laguna’s Mark Shyres agrees. “Typically, there is a real cause and

effect relationship between the skyrocketing cost of gasoline and

miles driven for fun and pleasure. I hope prices drop, but if they

don’t, local businesses that rely on summer tourists will need to

have a contingency plan in place.”

Shyres ought to know. His firm, Cornerstone Marketing West, has

represented some of the largest oil and gas companies in the nation.

Back in May, syndicated columnist Jeff Jacoby predicted, “The

current hyperventilating about ‘record high’ gasoline prices will be

forgotten by mid-June.”

At the time Jacoby wrote his column, oil cost about $40 a barrel.

By mid-October, crude was selling for $55 a barrel -- which made it

approximately 40% more expensive than it was last spring.

But then a funny thing happened to the price of oil (and gas) on

the way to the pump: the weather turned warmer than usual during the

holidays and prices began to drop. They fell so far, they nearly were

back to last spring’s price when all the Hanukkah and Christmas

presents were being opened.

Regardless which way the economic and political winds blow, oil

and gas prices are going to remain high until the worldwide

production of liquid fuels is stabilized and/or we devise other ways

to power large vehicles.

Amory Lovins, who, for the last 30 years, has been one of the

nation’s most influential energy thinkers, says: “Saving and

substituting for oil costs less than buying oil. Getting completely

off oil makes sense and makes money.”

Lovins runs the Rocky Mountain Institute think-tank in Snowmass,

Colorado. His latest book, “Winning the Oil Endgame,” offers a

technology-driven blueprint to wean the U.S. off petroleum within a

few decades: first, by doubling the fuel efficiency of cars, trucks

and airplanes; and then, by replacing gasoline with alternative fuels

such as ethanol and hydrogen.

According to Arnold Klann, president of Irvine’s Arkenol Fuels,

“Business models developed in the United States and commercialized

around the world produce ethanol from wood waste, paper and much of

what ends up in sanitary landfills.”

“It is estimated that the annual production of home-grown ethanol

from waste can create more than twenty billion gallons of new fuel

domestically,” he added.

If true, this means there will be an extended life of landfills, a

reliable source of energy, and a welcome price reduction at the pump.

These are outcomes that the White House, Congress and columnist

Jeff Jacoby should all be able to get their arms around.

Can you smell the fresh air now, Jeff?

* DENNY FREIDENRICH is a founder of First Strategies consulting of

Laguna Beach.