The rise of the credit card airport lounge

So today on the show, why oil prices are down but gas prices are up, why airline lounges have gotten so popular, and whether Canadian carbon taxes actually work.

All that after the break.

Okay, so full disclosure. I am a priority pass holder. I get it through a Chase credit card.

Damn. Okay. Fancy jetsetter. Waylon maybe.

Although I feel like the lounge is never in the same part of the airport that I end up in, so I never get to use it.

So in theory, you're a high roller.

In practice, I am just a schlub.

So Michael had this multi part question. Let's look at his first point. What is behind the rapid expansion of airport lounges? So since like 2018, travelers have complained that these lounges have gone downhill because of the explosion of these credit card reward programs. And with them, all of these lounges, the lounges used to be backed by specific airlines to create loyalty, and now credit cards are doing the same thing. Some people say they've gotten overcrowded and chaotic and they're a lot less fancy. I mean, at least 10 new lounges are set to open this year. Several are backed by credit cards. We reached out to Eric Rosen of the Points Guy. It's a sponsored credit card and travel website. And we asked him what's going on here.

It is. But these new lounges are definitely driven by competition. It's also just air traffic. So in 2024, people traveled 10% more on average than in 2023.

Yeah. Eric says These lounges definitely cost a lot, but people aren't really milking these lounges for all they're worth. And even if they were, don't worry too much about credit card companies making enough money. They're just fine.

Yeah. You'll never eat enough bruschetta or whatever to make up for their spending.

Okay, Waylon, one day I hope you achieve your lounge dreams. Next up, we have a question for Darien.

Yeah, you know, I guess the idea was that raising the cost of carbon would push people to lower their carbon emissions rather than paying that extra cost.

Right. So it's been six years since a carbon tax went into effect. Let's go through what actually happened.

more, but that doesn't mean it hasn't contributed something in Canada.

And didn't the newly elected Canadian Prime Minister, Mark Carney, didn't he axe this consumer carbon tax?

All right, thank you, Darian, for looking into that. Lastly, we have a somewhat related question and that goes to you, Adrian Ma.

Hi, this is Rick Weiland from Evanston, Illinois. And I'm perplexed. The price of crude is plummeting. The price of gasoline is soaring. Isn't this counterintuitive what's going on with oil? Rick, I hope we can unplex your perplexity. You've come to the right place. Thanks for the question. So if you look at national data on retail gas prices going from say January to now, they've gone from about $3.19 a gallon to around 3:30 a gallon. So not a huge increase. However, during that time, the price of crude oil has dropped a lot, from $80 a barrel to around $60 a barrel. We ended up reaching out to Javier Blas for some insight here. Javier is a Bloomberg columnist who covers energy and commodities and he says there's a few reasons why oil like crude oil and the gasoline you buy at the pump don't always move in the same directions. And the first reason is, well, I found this pretty fascinating, but did you guys know that the gas that you buy at the pump is actually different depending on the season? They actually have summer grade gas and winter grade gas.

Oh, I thought it was like you can't wear white after Labor Day. You can't put summer grade gas in your car after Labor Day.

I'm pretty sure that is a part of it. Yes. It's like it's a faux pas. Yeah, the pollution is a factor here. So during the summer when the temperatures get really hot, gas can actually evaporate while it's still sitting in your car's tank.

Really?

Yeah. I didn't know this, but the summer grade gas is designed to evaporate more slowly and Javier says that this makes a difference in the price.

The other big reason that crude oil and gas prices don't always move together is that, well, they're not the same thing. Crude oil has to be refined into gasoline, and that's costing more right now because of something called the refining margin. That's the profit that a refinery takes when they turn a barrel of crude oil into, into, say, gasoline.

Now, Javier says if lower crude oil prices continue longer term, then that will probably translate into lower gas prices.

Well, thank you so much to all of our question askers. And if you've got a burning economics question you would like for us to tackle, please email us. We are@indicatorpr.org that's indicatorpr.org this episode was