Middle East turmoil could ripple through Vegas

28 February 2011

LAS VEGAS, Nevada -- Bloody revolutions rumbling through the Middle East are starting to send shock waves through the Las Vegas tourism industry because analysts fear Middle Eastern oil shortages would increase the cost of traveling to Las Vegas.

That was the consensus of three analysts speaking to about 60 attendees late Thursday at the annual forecast dinner of the Chartered Financial Analyst Society of Nevada in Las Vegas.

Stephen Brown, director of the center for Business and Economic Research at the University of Nevada, Las Vegas, said the spike in oil prices so far are stemming from fears of shortages, rather than actual oil shortages.

The price of oil affects the prices that Californians, who account for 40 percent of the tourists visiting Las Vegas, pay at the pump. Other tourists catch flights to Las Vegas, but air fares will increase if jet fuel prices climb.

Also, when consumers must spend more for gasoline, they have less discretionary income for things like trips to Las Vegas, Brown said.

"Las Vegas is a place that is very dependent on (consumer) discretionary income," Brown said.

Libya supplies for 2 percent of the world's oil, said George Iwanicki Jr., managing director of global emerging markets equity at JP Morgan Asset Management.

Saudi Arabia has excess oil production capacity and could offset shortages from other Middle Eastern states, Brown said. However, Saudi Arabia couldn't do that it becomes embroiled in the rolling revolutions shaking the region.

"Saudi Arabia is a big wild card," Brown said.

Christopher Phillips, senior investment analyst at mutual fund giant Vanguard Group, said that energy's share of the U.S. economy has declined in recent decades.

Although oil shortages would affect the United States, the impact would be less than the same kind of shortage would have had during the 1970s, when motorists formed long lines to buy gasoline, he said.

Brown said that $4.50 per gallon gasoline "is probably within the range of possibilities." He doubted gasoline prices would reach $5 a gallon in the near term.

Already, AAA said, the price of gasoline in Las Vegas has jumped following the Middle Eastern revolts.

The average price of regular gasoline hit $3.368 in Las Vegas on Friday, up from $3.317 on Thursday and $3.084 a month ago, AAA said in its Daily Fuel Gauge Report.

"I think the increase in gasoline prices has caught everybody off guard," AAA Nevada spokesman Michael Geeser said.

Middle Eastern turmoil is coming as refineries are starting to reformulate their gasoline for summer and already have lower-than-usual gasoline supplies, he said.

He agreed that spiking fuel prices could cut tourism traffic to a trickle, recalling 2008 when gasoline prices exceeded $4 a gallon.

"You could get a room on the Strip for anything you wanted" because demand for hotel rooms had collapsed, he said.

Related Links
Nevada Gambling


Copyright GamingWire. All rights reserved.
Featured Vendors
Casino City Press
Slot-Tickets Worldwide
Casino City Press
A leading publisher and distributor of casino and gaming business data and market research reports.
Slot-Tickets Worldwide
Slot-Tickets® Worldwide, The Original and Still the Best.
Betson Imperial Parts & Service
Meister Economic Consulting, LLC
Betson Imperial Parts & Service
You one stop shop for all your gaming and OEM needs!
Meister Economic Consulting, LLC
Economic consulting firm specializing in high quality research and analysis
Regulatory Management Counselors, PC
Rymax Marketing Services, Inc.
Regulatory Management Counselors, PC
Over 35 years of experience serving the legal and regulatory needs of casino industry clients
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI
Sunkist Graphics, Inc.
Elite Gaming USA
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more
Elite Gaming USA
Provides a diverse inventory of refurbished gaming equipment and supplies from top manufacturers
Casino Schedule Ease
TribalHub
Casino Schedule Ease
Get a 90-Day Free Trial of 100% contactless, customizable table game & full casino scheduling
TribalHub
21st Annual TribalNet Conference & Tradeshow Nov 9-12, 2020 Gaylord Texan Resort, Grapevine TX
Kallop
Allen Meyer Group LLC
Kallop
Reward every player like a VIP with luxury brands at surprisingly affordable prices.
Allen Meyer Group LLC
AllenMeyer - the PPE Suppliers' Supplier
Castle Merchandising Inc
Code Red Headsets
Castle Merchandising Inc
Brand Name Products for your Player Rewards and Loyalty Programs
Code Red Headsets
Since 1999 Code Red provides a variety of 2-way radio accessories for Casinos & Hotels.
Global Gaming Expo (G2E)
Casino Essentials
Global Gaming Expo (G2E)
The largest gathering of global, commercial and tribal gaming professionals in North America.
Casino Essentials
The Ultimate Online Training Platform for the Casino Industry
Slot Machines Unlimited
iPaySolutions Ltd
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
iPaySolutions Ltd
Leading experts to help your iGaming business accept payments at the rates you deserve to win big
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Gaming Tickets, Inc.
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Breathe easier during COVID-19. We can help you reopen smokefree for everyone’s health.
Gaming Tickets, Inc.
35 years in the gaming industry - premium quality slot tickets, lottery tickets on time under budget


Your Guide to 15,668 Gaming Industry Suppliers