June 2007
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Impacts of fuel costs are felt across the Four Corners

By Gail Binkly

DAN HOCH, OWNER OF DANIEL'S CONSTRUCTIONPetroleum is the lifeblood of the national economy. When fuel prices rise, everyone is affected.

But the impacts hit particularly hard in places such as the Four Corners, where driving long distances is a way of life.

Few citizens in the region have access to daily mass transit. They must hop in their cars, pickups or SUVs to go to work, buy groceries, haul water, obtain health care.

Fuel prices for a regular gallon of gas averaged $3.21 nationwide over Memorial Day weekend; locally they were about 20 cents higher.

Whether they will drop now is uncertain. Most analysts predict that prices will be fairly high at least through the summer.

If gas soars to $4 or more a gallon, the effects could undermine the regional economy, including three of its mainstays: tourism, agriculture and construction.

And high fuel prices could affect area residents’ daily lives in numerous ways — from how they recreate, how many meetings they attend, even what government services they receive.

Impacts on county services

Montezuma County Sheriff Gerald Wallace said rising gas costs translate into fewer patrols.

“We started taking measures about a year ago, when the price went up,” Wallace said. “For the rest of the year we lowered our proactive patrols around the county. We never restricted response calls, but we did limit the proactive patrols and spot-checking on certain things.”

The sheriff’s office spends $6,500 a month or more on its gasoline bill, even though it gets a 10-cent-a-gallon bulk-rate break at Fraley’s in Cortez and does not have to pay gas taxes. Simply doing the work of law enforcement means a lot of driving in a 2,036- square-mile county.

Wallace said his department plans to take cost-cutting measures again if the price per gallon hits $3.50, but although it neared that level over the recent holiday, it went back down slightly.

“At $3.50 we’re having a higher awareness of the officers driving around,” he said. “If it hits $4 a gallon we’ll have a limit — people will be able to drive x number of miles a day. And if it’s $4.50 we would have to reduce that number.”

However, Wallace said, the department is getting by so far because its budget for gas this year was higher than in 2006 and it has saved money in some other areas.

Montezuma County Administrator Ashton Harrison said fuel costs are affecting other aspects of county government as well, in particular the road department.

“It’s not just gas prices but energy — oil,” Harrison said. “Chip-seal [paving] is oil and rock. The more prices go up, the less chip-seal we’ll be able to afford.

“We had already purchased the materials [for current projects], but if the prices keep up for future projects it’s going to have a major impact.”

The county maintains 771 miles of road, 535 of which belong to the county and 236 that are maintained for the Forest Service under a contract.

Other county departments heavily affected by the prices are senior services, which delivers meals to elderly citizens and operates a transport van, and the assessor’s office, which of necessity has to do a lot of driving.

Leaning on tourism

High gas prices affect local governments in another way: They impact tax revenues. Most municipalities rely on an influx of tourists to boost their sales taxes, while other entities need property taxes — fueled by growth — to maintain their funding.

Lynn Dyer, tourism director for Mesa Verde Country® in Cortez, said tourism’s impact on the county is huge. “I would say tourism represents a third if not more of the economy of the community,” Dyer said. Agriculture and light industry make up much of the rest, she said.

When tourism falls, as it did in 2002 because of wildfires at Mesa Verde, the consequences are far-reaching. “Restaurants and motels are the most impacted,” Dyer said. “But when you’re in a gateway to a national park, you have hardly anybody who isn’t economically tied to that tourism.”

Visitors buy groceries and gasoline; they get auto repairs. And when motels and restaurants do well, they remodel and hire new workers, boosting the broader economy.

“I don’t think we would have near the number of amenities in this community if we were not a gateway,” Dyer said.

So far, she has seen no tourism slowdown because of gas prices. The Mesa Verde Indian Arts and Culture Festival over Memorial Day went well, she said. There weren’t as many visitors as last year, but that was expected because 2006 was the park’s centennial.

Some areas rely on tourism even more than Montezuma County.

“We are a tourism-based economy,” admitted Mary Jo Coulehan, executive director of the Pagosa Springs (Colo.) Chamber of Commerce. Although there is a little agriculture in Archuleta County and a construction boom, visitors are critical to the local economy.

The county hosts many events throughout the summer, including the FolkWest Independent Music Festival June 9-10 and the 4 Corners Folk Festival over Labor Day weekend. Ticket sales for both have been strong, Coulehan said, but there’s no denying people are worried about rising fuel costs.

“People are certainly calling to ask what gas prices are, but they’re high everywhere,” she said.

Construction slowdown?

Industries other than tourism are also hurt by soaring costs.

Dan Hoch, owner of Daniels Concrete in Cortez, said fuel prices are definitely affecting his business, which does excavation and concrete work for construction. “We work in Cortez and Durango, probably within a 100-mile radius,” Hoch said. “We have five vehicles that drive 200 or 300 miles apiece every week, maybe more, plus trucks for hauling gravel and dirt. We’re feeling the price of the fuel, plus we’re buying materials and they’re adding a fuels surcharge onto those.

“We try not to pass that on to our customers but I’ve got to make it up in other ways.”

Hoch said he thinks the impacts are being felt in the construction industry.

“I think we’re already feeling a little slowdown from the pace it was last year, and I think it’s going to keep eroding the amount of residential construction that’s happening. I think people are going to begin considering that [commuting distance] as a factor in where they’re going to live.”

Phyllis Snyder, a member of the Colorado Farm Bureau’s state board of directors, and her husband Sid are longtime farmers and ranchers in the Cortez area. She worries that energy costs will suck the profits out of her livelihood.

“Everything we do is going to be higher because we’re a pretty energy intensive operation,” she said. “I’ve been asked, ‘What’s hay going to be priced this year?’ I don’t know what the market will stand, but most of us that raise hay are going to have to get a pretty good price or we won’t even be able to pay the fuel to go cut it.”

The Snyders sell most of their hay to buyers in New Mexico and Arizona. Last summer, when gas prices rose, Snyder said she did some figuring about how transportation was eating into their profit margin.

“We shipped some hay to Gallup [N.M.], one semi load of 800 bales, four times a month,” she said. “I figured one of the four loads in a month had to pay for the fuel to haul the rest.”

Later this summer the Snyders will be shipping cattle to Pagosa Springs and will have to pay those transportation costs as well, whatever they are. “These cattle are already sold, already contracted. We have to make the costs up somewhere.”

She said everybody is feeling the pinch.

“But what are your options?” Snyder asked. “Don’t raise your crop? Don’t farm? We’re trying to figure out how to cut out something, but you’ve got to work the ground, fertilize the ground and blade it. The high prices right now really hit everybody hard because of the timing. You can’t wait till next month to see if gas will go a little lower before you plant your crops.”

Silver lining

Farmers in Dove Creek, Colo., have similar concerns, said Dan Fernandez of the extension office in Dolores County. “It’s going to have a major impact on agriculture here,” he said. “People say, ‘How on earth can we keep farming with fuel prices what they are?’

“Dryland crops are marginal already, and when you increase fuel costs and the farmer has to make a certain amount of passes through a field, every penny extra makes a difference.”

If high prices continue, some farmers may be pushed into selling out, but there isn’t a great rush to that yet, Fernandez said.

“We’re seeing some of that. There was a sell-off here a few years ago. But I haven’t heard of any of the main farm families selling out at this juncture.”

He said there seems to be a strong demand for large tracts of land, but most of the potential buyers aren’t planning to farm. “We get a few people who say, ‘I just bought 40 acres and want to make a living farming,’ but on dryland that’s a pretty difficult task.”

Ironically, the high fuel prices hit just as farmers were feeling a surge of optimism because of good spring rains, Fernandez said.

But there is a silver lining in Dolores County, because high fuel costs mean the market will be stronger for biodiesel, the alternative diesel fuel made partially with plant-seed oils — and the county has a biodiesel plant in the works.

“That’s the one aspect of this that could be positive,” Fernandez said. “The price of oilseed crops is tied to commodities markets and fuel prices, so if gasoline goes up there could be a benefit.”

Right now the group working on the plant is wrapping up its capital campaign. Fernandez hopes the plant will be operational next year. He said the profitability of oilseed crops is also growing because of demand from the food industry, which is switching from “trans” fats to healthier oils such as sunflower and canola.

The plant could have a ripple effect throughout the area, Fernandez believes. “If we get this up and running, it’s going to help all aspects of our economy.”

Creating jobs is critical in a county where 37 percent of the work force travels out of the county every day to work, he said.

Eroding salaries

Just as soaring gas prices are eating into the profits of businesses, they’re eroding salaries earned by the working classes, particularly in a region where many people commute long distances to their jobs.

“I don’t see wages increasing to the point where people can absorb these higher costs,” said Hoch. “Something’s got to give.”

Sarah Jane White of the Sanostee Chapter of the Navajo Nation, said she knows people who commute from Sanostee, which is some 28 miles south of Shiprock, N.M., to Gallup and Farmington daily. “There’s no jobs so they have to drive,” she said. “Gas prices have really had an impact on them.” And there are many on the Navajo reservation who have no running water and have to haul the precious fluid to their homes and grazing lands. “My cousin hauls water 35 miles every day or every other day for her and her livestock,” White said.

All this has a major impact, particularly for people who don’t have much money to begin with, White said. She is active in Diné CARE, an environmental group currently battling the Desert Rock Power Plant proposed on the reservation. “Those of us who are working against this Desert Rock — we have to do a lot of travel too and now that these hearings are coming up it’s going to be a lot of impact on us. We don’t have that much money to be driving around. Twenty dollars can’t really get you nowhere.”

Fortunately for Diné who need health care, transport companies operated by Indian Health Services will take them free to medical centers.

That isn’t the situation with many other area residents, however, who often have to travel long distances to see doctors or undergo surgery.

David Bruzzese, public relations and marketing director for Mercy Regional Medical Center in Durango, said a “significant” number of the center’s clients come from outside La Plata County.

“It varies by services,” he said. “I think I counted how many patient visits we have from Cortez and it’s in the 10,000 to 15,000 range every year.”

Occasional visits to the center may not be an onerous financial burden, but for anyone regularly receiving chemotherapy or other treatment, travel costs add to the already-high price of health care.

For folks in Durango, public transportation is available in the form of the Durango Transit, which stops regularly at Mercy during limited hours, but most area citizens have to use private vehicles.

Warning signs

But despite the many ways high gas prices hurt workers and businesses alike, few folks seem willing or able to drastically reduce their demand for petroleum, so prices are likely to stay high.

Snyder believes what needs to happen is for more oil refineries to be built in the U.S. “We drill for oil and gas here and then we haul it to the coast of Louisiana and Texas and Mexico and then we pay to bring it back,” she said. “This is a ridiculous process.”

The Farm Bureau is also pushing for development of alternative fuels, Snyder said.

Hoch thinks new types of energy are definitely the future. “I was just talking to a guy in Mexico,” Hoch said. “He bought an ’85 Chevy pickup, full-size, and it gets 34 miles per gallon. The engine shuts down to four cylinders when you’re crusing and it runs on ethanol. He pays $2 a gallon for it.

“That’s a really good start but there’s much more we could do.”

He said the biodiesel plant is an excellent step. “We need to act locally to produce alternative energy. We could be a leader in the nation with the resources we have here.”

For 40 years the United States has seen warning signs that the fossil-fuel bonanza will end, but has ignored them, Hoch said. “Americans keep trying to postpone the inevitable instead of looking into alternatives. I think gas will be in the $4 or $5 range before people say enough is enough.

“But if we don’t get weaned off our consumption we’re going to hit a drastic point where the economy can’t absorb the costs and it’s going to be catastrophic.

“We’re spending $100 billion in Iraq and we could be pouring half or that or a quarter of that into alternative energy. I think it’s time we did that.”


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