Fuel prices at 11-year lows

EAGLE COUNTY — Steve Carver’s tow trucks burn a lot of fuel. Even with prices on the rise the past several weeks, Carver is still happy.

Carver is the owner of Big Steve’s Towing, one of two companies in the valley that tows heavy trucks. When the chain law is in effect on Vail Pass, Carver’s trucks head up there and stay until the chain law is lifted. Given that it’s cold, and that those trucks burn diesel fuel, the trucks stay running virtually all the time.

“When the prices went down, we could really notice it,” Carver said.

HISTORICALLY LOW

The drop in fuel prices started in 2015, thanks to an oversupply of oil on the world market and a subsequent collapse in prices.

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Oil prices statewide have increased from less than $2 per gallon around the beginning of the year to an average of $2.25 per gallon. Still, that average is significantly lower — almost 35 cents — than this time in 2015. In fact, GasBuddy, a fuel price tracking website, reports that early-summer fuel prices this year are the lowest in more than a decade.

The drop in gas prices is even more pronounced when looking at 2014 averages. Just two years ago at this time, the statewide average was $3.45 per gallon. The average price was $3.79 per gallon in 2013.

Carver said when diesel prices — generally a few cents higher than gasoline — were at their peak, his company was spending more than $8,000 per month on fuel.

The decline in prices has been good news for Big Steve’s bottom line, of course, but it’s also good news for the company’s clients.

“When prices were so high we charged a fuel surcharge,” Carver said. “We dropped that surcharge when the prices went down.”

LOOKING FOR A CORRELATION

Cheaper fuel is good news for those who don’t have heavy trucks, of course, but the effects on travel and tourism are less noticeable.

Summer lodging reservations around the mountains are generally up for this year over 2015, but summer business in the mountains has been on an upswing for a few years now.

“I would love to know if there’s a correlation between gas prices and bookings,” Vail Valley Partnership CEO Chris Romer said. The partnership is the valley’s regional chamber of commerce and also runs an individual and group reservation arm. In that role, the partnership keeps close tabs on a lot of tourism-related data.

But, Romer added, “Gas prices don’t have an effect I can see.”

As an example, Vail set a summer sales tax revenue record in 2014, when gas prices were well above $3 per gallon.

CONSUMER CONFIDENCE

While gas prices may not have an obvious impact on Vail Valley tourism, cheaper fuel does put more money in travelers’ pockets.

“From a general confidence standpoint, people may try something new, or take an extra weekend trip,” Romer said. “Anything that leads to more consumer confidence is positive.”

There may be more people taking weekend road trips in Colorado this year. AAA Colorado tracks travel patterns around the state, and early indicators show the potential for more leisure travel this summer.

Wave Dreher, the media relations person for AAA Colorado, said the national AAA organization estimates that as many as one-third of Americans are planning family road trips this year.

Noting that lower fuel prices put more money in travelers’ budgets, Dreher said, “In Colorado, that’s wonderful news.”

That could also be good news for restaurants and hotels along travel routes.

When prices are high, Dreher said one way families adapt is by either picnicking with food bought at supermarkets or heading to less-expensive fast-food restaurants. Lower fuel prices can lead to meals at sit-down restaurants, or an extra night on the road, Dreher said.

Oil prices are on the way back up, largely through market forces and a gigantic wildfire in Canada. And while no one can predict what effect natural disasters or international crises may have on the market, Dreher said the gas price picture looks stable for the foreseeable future.

“I don’t see any reason why prices should take a big hike,” she said. “We’re in fairly good shape going into the season.”

Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, smiller@vaildaily.com and @scottnmiller.