It ain’t laughing gas

You’re not going to believe this, but Saipan’s drivers are getting a comparatively good deal on gas prices. Saipan used to pay about 60 cents over U.S. mainland prices for gas; this premium is just my estimate off the top of my head, but it’s a workable ballpark figure.

The premium now? About 10 to 30 cents sometimes. As of yesterday morning, some Saipan Mobil stations were selling unleaded for as low $3.119 a gallon. That’s quite good when you consider that a lot of people in the mainland U.S. are paying over $3 now, which is a useful benchmark to consider. And I needn’t remind you that oil, which is where gas comes from, is hovering around all-time high prices these days.

That “all time high” isn’t adjusted for inflation, actually, so things are a bit murkier than they seem.

Still, none of us are happy about it. The risk here is that the Commonwealth’s chronically emotional approach to economics will manifest in the gasoline realm, and will somehow undermine the local supply side of things, which has been very benign under the circumstances.

Will people—and politicians—start huffing and puffing about gasoline prices and demanding that the government “do something” about it?

Do something? Like what? Find some computer wiz at Megabyte to hack into the Chicago Board of Trade and somehow collapse the spot price of oil?

Or socialize the gasoline industry so that the Commonwealth government’s proven genius in business matters can do for gasoline retailing what it did for tourism and La Fiesta mall? Actually, I am in favor of this scheme because I could use a good laugh.

But reacting emotionally to expensive gasoline won’t solve my problems…or yours either, for that matter.

Of course, the human mob, here or anywhere else, operates on raw emotion, so any reasoned comments on supply-side activity, price theory, or commodities pricing aren’t going to sway anyone. I have no illusion that they ever will. Nor do I care: I’m no oil industry PR guy.

Which is a good thing, because they’ve got a tidy little PR bomb on their hands. You may have read about the $400 million retirement package doled out to retired Exxon CEO (Chief Executive Oinker) Lee Raymond.

Talk about pork for a porker! Point taken. But if you read the Big City Newspapers, everyone who missed their meds in the Prozac Nation is claiming victim status (as usual) and blames Raymond’s deep swill bucket for all their woes in life. I see no logical cause and effect. The fact is that gasoline wouldn’t be any cheaper if he didn’t get that astronomical pension; the money would just get distributed to shareholders instead. Lee Raymond might take the prize for greed, but he does not set the world’s oil prices.

Boiling things back down to practical matters, you might want to know if there is any good news for Saipan in this oil price situation. Directly, no.

But indirectly…well…we have to step back and look at the big picture on this, and the oil situation is correlated with a bigger story that holds much promise for business-minded people in the Commonwealth.

Yes indeed, there is mondo opportunity correlated with this situation.

Which is a good place to end today’s screed, and a great place to start next week’s, so I’ll see you next Friday.

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Correction: In last week’s column I stated “smaller government will make for a more burdened private sector.” Instead of “more,” I meant to say “less.” My mistake.

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Postscript: Fuel prices globally are ticking up alarmingly as I prepare to file this column. If you can find gasoline in Saipan for $3.119 per gallon, it’s time to fill up, since this price is going to have to spike up.

(Ed Stephens Jr. is an economist and columnist for the Saipan Tribune. E-mail him at Ed@SaipanEconomist.com.)