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$10 Gallon Gas, Higher Taxes & Business Giving (Part 1 of 2)

March 10, 2011 - Ernest Hohmeyer
The family was out doing their different things and it was nice quiet moment to catch up on some reading. I made myself one of my favorite lunches and thought this will be a nice, contemplative time.

I first opened up my computer and my nice lunch almost went in the other direction as I saw the MSN headline “What if Gas Cost $10 a Gallon?” The first line was “Life would go on, but it wouldn't be the kind of life we would like. It's time to start preparing for possibilities that used to sound like fiction.”

Do you know that according to this article, towns in Alaska are already paying this?

To indicate how volatile our economy is where projections can change in a heart-beat, the U.S. Energy Information Administration projected in this article that “the national monthly average retail price for regular gasoline could exceed $3.50 per gallon next summer, with a 10% chance it will raise to more than $4 per gallon.” However, they suggest that factors like China’s continued thirst for fuel or the recent political turmoil in the Middle East could impact prices beyond these projections.

Well, its only March and locally we are already paying beyond their initial estimation. We need to hope that things will settle down before our busy tourism season.

We ought not to bet on it and continue to think out of the box as businesses and a community in terms of attracting economic activity.

This is not good news for our rubber tire based economy. Oh yes, I know some will say that means air fare will go up as well affecting destinations such as other mountain areas in the mid-west. The basis of this theory being that folks that were planning to fly may now take a shorter vacation, closer to home and drive.

I was always unsure of that theory believing in the ripple effect. Yes, some folks may drive instead of fly. However, there are also those who may have planned to take that family vacation and now cannot or may take a shorter one.

The ripple effect streams to other parts of our lives as higher fuel prices will eventually effect everything we buy from food to clothes. Just as folks have had to do in Alaska, they make concessions as they cannot abandon paying for fuel totally.

Think about what this would mean to most of us next winter if fuel is even $5 a gallon?

“$10-a-gallon gas could boost the inflation rate to 10%. The result would be devastating to the world economy and to the global food situation” according to Todd Hale, a senior vice president at research company Nielsen quoted in this article.

The U.S. Post Office is quoted here as saying that simply a one-cent price increase in fuel would cost them“$8 million annually, or $667,000” according to Greg Frey, a Postal Service spokesman.

Wow, can you imagine what $5 a gallon may do?

And that may not be the only problem as people may be forced to reallocate their budgets and save. Discretionary spending for retail, vacations etc. may be impacted. Even the mail “experienced significant declines” during the recession.

It is obvious that a continued increase in utility costs has a domino affect potentially exceeding 2011 budgets for many of us whether we are families, businesses or municipalities.

Having enough of this and trying to salvage my lunch, I turned to the North Country Living Section of the ADE to read their featured story only to learn that the monies for another important industry, the arts, have been cut back to the point where it is directly affecting these small and often shoe-string businesses.

Trying to preserve my peaceful hour, I turned to my e-mail only to learn that if New York’s state budget passes, tourists may wind up paying more for hotels booked through third parties like Travelocity. Currently, as part of the budget, are plans for a 20% increase in the hotel occupancy taxes for those that use intermediaries to book rooms. This effects not only on-line venues but also includes travel agencies and tour operators. Just like an increase cost in fuel or cuts in funding, someone will ultimately have to pay the price, namely tourists interested in coming to our area.

In an article in the New York Times “New York State May Increase Taxes on Hotels” they talk about how this would affect New York City visitors “where the current occupancy tax is now 5.875 percent, the tax for third parties would increase by one-fifth to 7.05 percent.”

And then of course you add sales tax and it may force you to undercut your own costs even more to make your special deal during the shoulder seasons, a good value.

Moving on, I turned on the radio and was saddened to learn of the dilemma facing our local school districts. I hear this and the struggles of our local governments and I have his bad premonition that a potential rise in local taxes is coming – again.

These entities can only save so much. We need quality jobs and to expand the tax base. Once again, our individual businesses can only offer so much.

I felt a moment of being overwhelmed. I want to help these local organizations that may be struggling due to budget cuts. I would like to be involved in helping our local governments bring in jobs to the community. I am also beginning to realize that it may take more of a marketing effort for our small business to convince people to travel here if the economy continues its incoherent course.

Perhaps we need to realize that as individual small businesses and communities we can only do so much to push forward our businesses and our community. It is becoming harder to muddle along, there are ominous clouds on the horizon with potential tax increases, an up and down economy and the need to be more energized than ever with both your own business and community organizations.

Just like oil, we as individuals only have so much energy.

Together though, through the creation of new and innovative real partnership we may be able to enhance our capabilities. For example, “virtual destinations,” and real product and service linkages among small businesses may offer the ability to reach new customers and help to retain old ones that are constantly being bombarded with new choices.

As we face the dynamic of people continuing to be careful with spending and when they do, having more choices then ever to spend that money, we need to be sure we get the message across that you should come to our area or our downtown.

This is true for a wide range of economic issues ranging from customers who want to shop in Plattsburgh, efforts to expand our tax base, to visitors who are debating visiting the Green Mountains vs. the Adirondacks.

As a business and a community we need to be working together on these issues now, not when we are facing budget deadlines, closure of a vital organization or $5 gallon gas.

Perhaps we need to grab a hold of the spirit of entrepreneurship and look at innovative solutions. Perhaps we need to look at our fellow businesses and our local communities in a different way: that we are all working together for a quality-of-life company we call Tri-lakes or Adirondack Park "Inc." What’s this? Stay tuned.


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