Several weeks ago state Comptroller Susan Combs spoke at an informal meeting with a group of civic leaders at the Brownwood Chamber of Commerce. She outlined for the audience some of the characteristics and factors in the Texas economy that were helping it to perform much better than most states in the nation. Combs mentioned things like diversification, oil and gas development and tort reform. The civil justice environment in the state today is more favorable to doing business and the reforms have resulted in the growth of businesses and jobs.
One area of the economy that has changed in the state since the comptrollers visit is the impact of continuing increases in the already high price of gasoline. Combs said that at the time they were not seeing a decrease in travel and consumers in the state were continuing to purchase gasoline. There is increasing evidence that may be changing and not only with consumers.
A report in the Fort Worth Star-Telegram outlined the difficulties law enforcement agencies in North Texas are facing with trying to keep transportation costs under control without reducing their services. Even though police and sheriff’s departments have exemptions from some taxes and buy in bulk, the expenditures are higher than expected and budgeted, and many departments are considering cost-cutting measures. The newspaper reported that in Fort Worth the police are re-thinking a policy that allows officers to take police cars home, which adds extra mileage. Other departments are considering having officers to remain parked between emergency calls and some are considering having them turn off the engines while they wait.
Every business where delivery is a large part of the service they offer is facing similar balancing issues as the law enforcement departments. In Parker County, Sheriff Larry Fowler said he would absolutely hate it if they had to ask patrol cars to remain stationary. He said he wants patrol cars to be seen in neighborhoods. However, his department will likely go $80,000 over budget in gas purchases this fiscal year. At the newspaper, with two months left in the fiscal year and another adjustment in the reimbursement coming, we are $14,000 over budget. Home delivery remains the expectation of the public from the local newspaper and a service newspapers want to continue to provide.
The Energy Department’s Information Administration predicted the high prices will cut demand for petroleum products in the U.S. by 330,000 barrels of crude oil per day this year. However, times have changed dramatically from the days of the OPEC embargos when what happened in the U.S. had a major impact on oil supplies and pricing. The EIA said the demand from countries such as China, India, Russia, Brazil and the Middle East will support high prices and keep global oil demand growing about 1.2 million barrels a day this year. Oil prices have nearly doubled in a year. With a falling value of the dollar, the price of oil is cheaper for foreign investors.
Gasoline prices are also having an impact on states that have a once-thought to be recession-proof industry — gaming. The gaming industry has experienced unprecedented growth in the last several decades. According to USA Today, in 1970 there was only one state with casinos with revenue of $540 million. Today there are casinos in 37 states, with revenue reaching nearly $58 billion in 2006. Almost all of them are experiencing at least a little bit of pain says Robert LaFleur, a gaming analyst for Susquehanna Financial Group. Anything that hurts consumer spending will eventually have an impact, even on gambling.
The cost of gasoline becomes a matter of making choices, often between two unfavorable ones. With the law enforcement departments asking the officers to stop their cars from idling may save gasoline. However, dashboard mounted computers and radios drain car batteries if the engines are not running. The devices are necessary for officers to get information and emergency calls but if they drain the battery and the car won’t start, the calls will go unanswered. Decisions to be made in business and with household spending may not have life threatening consequences, but they can be uncomfortable and even painful.
Robert Brincefield is vice president and publisher of the Brownwood Bulletin. His column appears on Sunday. He may be reached by e-mail at email@example.com.