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Gas at $3

trying to make the best of a depressing situation

trying to make the best of a depressing situation

September 18, 2005|By TIM ROWLAND

The best-selling book "Friday Night Lights" chronicles the fanaticism of Texas high school football players and fans. But it also provides a revealing look into life in the oil patch. The pattern is predictable as the seasons. The price of oil skyrockets for one reason or another, touching off a tumultuous boom and an ensuing spending spree throughout the state. With more money than sense, people overbuild, overspend, overinvest and overindulge, acting as if the good times will never end.

Then the bottom falls out, and those who have been to too extravagant are forced to start from scratch. Which they do, eventually re-making their money all over again in the next boom. A common bumper sticker in Texas says, "Lord, if you just give me one more fortune I promise not to (fritter) this one away."

The moral of the story, of course, is cheer up. We have the same tendencies as Texans, and when the price of gas goes up we seem to think it will stay that way forever, which it never does. It's likely that gas will be back under $2 a gallon within a year.

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Of course this is not to say there won't be any short-term implications as people do some budget-adjusting to compensate for $50 fill-ups. Outside of the essentials for Washington Countians (food, shelter, lottery tickets) just about anything is fair game for cuts. But more worthy of consideration will be how the prices affect the county's commuter class and resulting housing boom.

Are commuters' incomes sufficient to absorb a doubling in the cost of fuel? In theory, yes. Generally speaking, the closer to the city, i.e., the longer the commute, the higher the salary.

What makes it interesting though, is anecdotal evidence that some of those who have moved here from points east are cutting their financial affairs pretty thin. New residents celebrate the fact that they can cash in their Gaithersburg townhouse and afford one of the ubiquitous, $400,000 McMansions popping up along every other ridgetop.

Yes they can, but a sizable number of them need a dangerous, interest-only loan to swing it. And those notable economic indicators known as pizza delivery guys say that aside from the mandatory wide-screen TV, the furnishings in a few of these big homes are all but nonexistent.

In other words, metropolitan-area salaries can afford a person an impressive estate out here on God's country, but it may stretch him thin to the point where a sizable increase in the cost of gasoline and heating fuel will cause pain.

And people in the suburbs who up until now had been considering a massive house in the country may do one of two things: Put their plans on hold until they see how gas shakes out, or simply buy a house here with fewer than six columns holding up the portico.

Neither of those scenarios is good news for the big house/interest only set, which is literally betting the ranch that their homes will appreciate in value, since their monthly payments buy them no equity. If gas prices scare off buyers, the McMansions could conceivably drop in value, which would prohibit those holding interest-only loans from selling. Then when the note is adjusted to a new and higher payment, things could get ugly.

Of course this is something of a doomsday scenario. Just as likely, we'll weather the upward ticks in fuel, and home values will continue to increase, although at a notably slower pace.

We might even thank this pop in gas prices for lending a bit of sobriety to what the forecasters like to call "irrational exuberance" in the housing market, and for making us think in ways we haven't before.

Things can hit, literally out of the blue. And when they do, it's good to have a safety net, or at least a plan. Or better yet, an opportunity waiting in the wings.

It's interesting to recall that just four months ago, 15-year-old Gregory Dahbura stood before the Washington County Commissioners encouraging them to work toward bringing commuter rail to Washington County. Today he's looking downright prophetic.

As energy costs and population densities rise, rail becomes a legitimate topic for conversation. Current state transportation officials, whose vision extends no further then the end of a toll booth, had no interest in the commuter rail idea last May. But they'll be gone soon, if you know what I mean (and I think that you do) and perhaps the next set will be a little more enlightened. Meanwhile, it's good to know Washington County has 15-year-old stock with more imagination than the Annapolis set.

And speaking of imagination, it was 15 years ago that Hagerstown's Marsha Fuller began to champion the idea of telework centers, an idea that may have simply been $2 a gallon too soon.

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