Saipan’s Denver omelet conspiracy

If you’re looking for something to smile about, you can dwell on this: Oil has fallen from the $50 per barrel neighborhood to the $40 neighborhood. Saipan self-serve unleaded is $2.55 a gallon at the two stations I tallied, and I expect it to ease a few cents soon. In the long run, oil will inevitably go back up over $50 a barrel and take pump prices up with it…but for now, there’s not much to complain about on the gasoline front…

…which doesn’t stop some folks from complaining, of course. For years now, we’ve heard from Saipan’s amateur economists, who nurse various versions of the same basic conspiracy theory. As best as I can surmise, the theory runs that on some unnamed date, the local Mobil and Shell managers had a secret meeting at Shirley’s coffee shop one morning, and over Denver omelets, wheat toast, and java they hatched a successful conspiracy to manipulate global petroleum prices. Note to the clueless: Saipan does not set global oil prices. Another note: High oil prices are a disadvantage, not an advantage, to local gas stations, so quit talking nonsense.

Oh, one more note: Wheat toast sucks, it is only suitable for consumption by dodo birds and amateur economists, which are not mutually exclusive categories.

But if gasoline prices aren’t something to whine about at the moment, the electricity front is a cause for concern. Not alarm, but concern. Commercial rates, in particular, are mighty steep, and the inside word I get from my little spies at the CUC is uniformly gloomy. The day is coming, some warn, when it’s decreed that rates will have to soar over the 25 cents to the kilowatt hour range, which will basically mean that no normal business will be able to afford air-con or refrigeration. Yikes, we’re talking warm beer here! Yeah, I’ve got your attention now, don’t I? And thus we confront a heinous juncture of chemistry and economics: Warm beer forces societies to sink into socialism, an observation I base on my personal survey of the world’s economies (and pubs).

Anyway, Saipan’s commercial electric rates were, the last time I checked, 33 percent higher than residential rates. I wouldn’t raise a ruckus about that right now, given that it seems only fair that the household sector deserves affordable basic electric service. Fine with me. But if the CUC is heading for some kind of problems, at some point the business community is going to have to realize that they are Numero Uno on the financial target list.

All of which sends a guy reaching for some alternative. Wind won’t work, as I’ve noted a few times here. So I did crunch some rough data on solar (photovoltaic) power. I came up with a cost of about 47 cents per kilowatt hour for my scenario, which is three to four times higher than current Saipan rates. However, a rough calculation is just that, rough, and maybe there is a more refined set of data worth looking at. I base such costs on what’s called a “levelized” calculation, and, no, I won’t describe that method unless you send a box of good cigars. It’s just too hard to explain. So make that two boxes.

Still on solar: There is a guy on Saipan who is looking into the solar power realm, but I don’t know if he’d want to share his thoughts on the subject with readers of this column. If he does, though, maybe I can get some real data to you, instead of my general estimates based on rough data. That would be mondo cool.

Overall, then, wilting oil prices may be good news at the pump soon, but the combination of global factors, the inevitable demise of the U.S. dollar, and the rumors I get from CUC insiders means that Saipan’s energy situation is never going to be far from the headlines. We can’t do anything about gasoline, but the electricity issue can’t be ignored forever.

As for next week, we’ve got a backlog of reader email to dig into, so maybe we can get to it finally. Stay tuned.

(Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. Ed4Saipan@yahoo.com)