Gas Prices Likely to Hurt, But Not Cripple Nevada's Economy

Experts warn that Nevada is likely to take an economic hit from soaring gasoline prices, but they don't foresee anything terminal.

"Nevada is going to get hit hard, but it's not the first time," said Thomas Cargill, an economics professor at the University of Nevada, Reno.

While southern Nevada's tourists tend to arrive by plane from around the country and the world, the Reno-Tahoe area is more dependent on motorists from Northern California.

Cargill compares the present situation to the economy of the late 1970s and early '80s and says that was a more chaotic time with 20 percent interest rates, high unemployment and home mortgages above 15 percent.

As recently as a year ago, he said, "people were saying if gas got to be $3.50 a gallon, the world would fall apart. It didn't fall apart. It won't this time.”

"I think most economists say the rate of growth will slow in 2008," he said. "But you hear very little talk that there will be a recession."

More expensive gas means more expensive travel, according to Peter Krueger, who represents gas station owners as the executive director of the Nevada Petroleum Marketers Association.

"I wish I had something good to say," he said. "We are all facing these uncertainties. As long as the market is reacting to uncertainties, all those factors are going to mean upward pressure
on retail prices."

Steve Yarborough, who operates four service stations in northern Nevada, expects prices to creep up to about $4 a gallon, then back off to current levels.