Business feels shock waves
March 21, 2003
The call to arms may have diminished phone activity for one South Lake Tahoe insurance agent, but it may boost requests from homeowners to refinance.
Businesses from a car dealership at the “Y” to a hotel at Stateline shared a wide spectrum of experiences the day after the United States went to war with Iraq.
Most hope for a quick end to the conflict and agreed the full effects on this tourism-driven town are unknown at this point.
“(Thursday) the phone is dead because people are glued to their televisions. Anytime this happens, people want to know what’s going to happen next,” Allstate Insurance Agent Allen Vogt said. He went home early to walk his three dogs.
For those on the road, gasoline prices have leveled off with South Lake Tahoe’s averaging $2.19 for a gallon of self-serve unleaded. California’s have increased 7 cents in 10 days to $2.18.
Two factors could make that price go either way. The price of crude has dropped, eventually prompting gas prices to decrease. But the prospect of oil wells set on fire have caused concern the price of crude could go back up.
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Since the Persian Gulf War in 1991, California has become 23 percent more dependent on that area’s oil supplies, California Energy Commission spokesman Rob Schlichting said.
“If there’s great damage to those oil fields, it could cause crude oil prices to go up again. It’s an incredibly volatile market,” Schlichting said.
Travel, the lifeblood of the Tahoe economy, is tied to gas prices.
“The economic impact of war is obvious. The key issue becomes the duration,” Lake Tahoe Visitors Authority Executive Director Bill Chernock said.
Chernock shared a travel industry theory that if the war is short people who have waited to travel may do so at the end.
“The wild card in all of this is what’s going to happen domestically,” he said.
A terrorist attack would place a wrinkle in plans for a busy travel season across the nation, California Travel and Tourism Commission spokesman Fred Sater said.
Out of respect for the troops, the commission pulled its television commercials for the next two weeks.
Some hotels are awaiting the effects of war on bookings, with Embassy Suites reporting no change in booking behavior for now.
“Where we’re going to be in the next few weeks remains to be seen,” Vice President of Marketing Bill Cottrill, said.
With room rates down, the hotel reports reservations have increased 14 percent from last year.
“I think people will hold back on travel until they see the full extent of fighting to see how it’s going. Then, they’ll travel,” South Lake Tahoe Chamber of Commerce Executive Director Duane Wallace said. He suggested consumers will use the stock market as a barometer.
Brookstreet Securities Corporation financial consultant Cheryl Sillings said Thursday the market has already reacted to war, and the initial readings show a U.S. economy struggling with uncertainty.
“It’s already gone down, and anything that spooks the market is bad,” she said. “Consumers have carried the market, and now we’re starting to see cracks.”
Even the Federal Reserve can’t agree on where the economy is going, she said, pointing to its reluctance to lower rates within the last week.
Broker Jennifer Stevens of Paragon Financial indicated that requests for refinancing have increased considerably.
Stephens said there are two types of clients. There are those who wait for the Federal Reserve to lower interest rates if the war continues longer than planned and others who are rushing to lock in a rate to buy into perhaps the largest purchase of their lives — homes.
–Susan Wood can be reached at (530) 542-8009 or via e-mail at email@example.com