US: Expect more pain at the pump
The biggest story for both visitors and others in the US this week is continually higher gas prices which in some areas were approaching record levels that could in some ways impact the future travel market.
“The escalation in fighting in Libya is increasing fears of a civil war and with signs of political unrest spreading throughout the Middle East and North African nations. The price of crude continues to climb,” reported CNBC News.
“Although the unrest in Libya has not yet spread to larger oil-producing countries and has not further disrupted oil supply, the concern of a supply shortage remains,” said Jessica Brady, spokeswoman for AAA Auto Club South. She said retail gas prices are expected to continue to increase again this week.
In some areas, gas prices are climbing towards $4 a gallon.
The most immediate impact on travel: rising costs of airline fuel, which virtually everyone says could threaten the upturn in profitability for the industry. The almost certain result is higher prices and more surcharges. Cruise lines might also start levying new surcharges.
For areas relying on the automotive drive-in tourist market, the summer could be less prosperous than anticipated.
Six years ago, when there was a similar spike in prices, over half of all Americans in a survey said they would travel less that coming summer. During times of higher gas prices, some tourists opt to travel less distances as well.
But for the rest of the travel market, the gas price issue should not pose a serious or ongoing threat.
Drivers may be complaining about gas prices in record numbers but surges at the pump should have little immediate on the broader North American economy, which includes travel, experts say.
"It’s going to slow things down … but luckily, consumers’ pocketbooks are doing reasonably well," Standard & Poor’s chief economist David Wyss told USA Today. "Some people are going to get hurt by this. But the overall impact on the economy is going to be fairly limited."
Will prices continue to go up?
Retail gasoline prices will likely continue to increase, based on prices in wholesale markets, says Guy Caruso, administrator of the Energy Information Administration, the statistical arm of the Energy Department.
But for how long?
Moody’s analyst Chris Lafakis says airlines are the biggest industry impacted by rising gas prices.
But they “only respond to rising energy prices if they are sustained for an extended period of time since the price of oil is so volatile.”
“If the oil price shock was sustained for an extended period of time, say 6 months, they (airlines) would start to increase fares or add fees such as seat change fees or checked baggage fees.
On the other hand, there’s a positive impact for higher gas prices.
Repeated studies have shown less driving (no surprise here) leads to up to as much as one-third fewer automobile accidents, a finding that benefits not only residents but also visitors.
By David Wilkening
David
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