Experts analyze impact of soaring gasoline prices

High gas prices are having a variety of effects that manifest themselves differently in different segments of the population.

Every cloud has a silver lining, according to Greg Hoffman, Hoffman Financial Resources. While higher gas prices put a bite on consumers' wallets, the high prices are opportunities for some businesses.

"Businesses working on or producing alternate fuels will benefit," Hoffman said. "Internet stores as well as local retailers benefit because high fuel prices mean people don't want to drive as far to buy things."

Vernon County is experiencing a mini-boom in oil production as the higher prices make extracting the thicker oil found in local ground a more profitable proposition. The question that bothers prospective drillers is: "Will it last?"

A similar spike in oil prices during the 1970s brought many companies into Missouri to drill, but prices began to fall and production peaked in 1984.

Since then, many of the energy businesses left the area. After their departure from the area the infrastructure they had built up declined and disappeared, so any future development will have to be essentially from scratch.

One of the companies that is trying to turn the situation to their advantage is Colt Energy, a Kansas-based oil and gas exploration and production company founded by Nick Powell. Vernon County's oil is mostly close to the surface, which ironically makes pumping it harder.

The process Colt Energy uses involves drilling several holes and, using new drilling technology, bending them horizontally and running them in a pattern encompassing most of the field. The company plans to run steam through the horizontal pipes to heat the thick oil in the ground to make extracting it easier. Then they plan to drill down in the space between the steam lines to the oil.

As long as energy prices remain high enough, Vernon County will be a profitable place to produce oil, and the people who own the land from which the oil is coming from will benefit.

Hoffman isn't sure if the current boom will be long-lived or not, since his surge in prices is based on a different type of economy than previous booms.

"It's hard to tell," Hoffman said. "Back then it was because OPEC was controlling the supply. Now India and China are using more oil and their economies are growing. It's not just a supply issue, it's a demand thing too."

Another thing driving the cost of oil upward is the slide of the dollar against other currencies, most notably the Euro, a fact that is making many oil-producing countries consider switching to the European currency.

"OPEC is considering abandoning the dollar," Hoffman said. "It would be a big blow to the prestige of the dollar but if they are paid in dollars today and the value decreases by tomorrow, they've lost money and they don't like that."

Travel will probably be as congested as previous years, the American Automobile Association doesn't think rising gas prices will keep people home this Thanksgiving. Michael Right, vice president for public affairs, said that the nature of the holiday made it likely that travel would be just as heavy this year as in past years.

"This is such a family holiday that I don't think a few extra dollars will deter someone from visiting Grandma," Right said.

Asked what he thought oil prices might do Right said that wasn't something that the AAA did.

"We don't make forecasts for fuel prices, that's not something we'd care to try," Right said. "The average price of gas is $3.11. It was $2.23 the same time last year. Oil is selling for something like $95 a barrel now and it was $58 last year. It's just too volatile," Right said.