Gas gouge: Gas cost approaching $2 a gallon
The impacts of the gas price hikes have spread across the local and national economy, prompting AAA to suggest on its website the price hikes are “close to gouging.”
The fear in this tourist-dependant economy is that it will deter travelers. But oil and gas prices aren’t the only consideration.
They aren’t the highest price ever seen here. In May 2001 regular unleaded was selling for $2.14 a gallon.
There’s concern in the vehicle-dependent travel industry that the fuel price hike, combined with war and terrorism worries, will depress an already hurting travel and tourism market that’s down 10 to 20 percent around the globe.
“We’re in a brave new world when it comes to travel,” said Colorado AAA spokeswoman Mary Greer. “More Americans than ever are travelling by car.”
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More than gas hikes
But Jan Strauch president of Overland Express and Travel, which operates several offices in Eagle County, has a another view of the situation.
“Price is not the reason people aren’t traveling,” he said. “We have at the moment the lowest prices I’ve seen in 20 years. It ain’t the price of a barrel of ail that’s causing people not to travel. Now you’ve gotta check not only the weather but the terrorist alerts too.”
With a war with Iraq threatened and national terror alerts at orange, the second highest level, there’s fear of more attacks that even a super bargain can’t fully assuage.
Even a $198 round trip from Denver to London resulted in about half the people inquiring about the flight declining it, Strauch said. Normally when gasoline prices increase, Strauch says he sees an increase in airline travelers. But not this year.
“There are other counterbalancing forces in the marketplace,” he said.
The fear of traveling has not yet affected local lodging.
“We haven’t seen direct impacts of increased terrorist threats or increases in gasoline prices,” said Ian Anderson of the Vail Valley Chamber and Tourism Bureau. He said advance bookings have remained strong in February.
The hikes may not be affecting the volume of rubber tire tourism. Rick Dilling, new owner of the West Vail Texaco, said sales of gas are about the same as always.
“People are buying a ton of gas, but everyone’s complaining about the price,” he said. “I’m not the one at fault. There’s not a whole lot I can do about it.”
But the hikes affect more than just tourism. Other businesses are feeling it, too.
For DAC of Eagle, a regional delivery trucking service, the price hike is hitting home.
“It’s a major jolt in an already difficult time,” said Gary Green, a vice president of business management. His company operates 25 trucks. “You don’t have to eat. You have to feed your car.”
But the tourism sector of Eagle County is more air travel dependant and increasing fuel cost is one of the largest components of operating an airline. That worries Eagle County Administrator Jack Ingstad who said the increasing cost of operating may cause airlines to look twice at outlying routes like Eagle.
“It may make it more difficult when we renegotiate contracts in May with the airlines,” he said. “If fuel prices go up it may make it more difficult for airlines to operate in some communities.”
More bus riders
For ECO, the county-wide bus system, the rising fuel costs may actually force more ridership.
“I see it as a positive. Because of the rising gas prices we’re seeing an increase in our ridership,” said ECO Director Jim Lair. “People can pay $2 a gallon or ride the bus for $2 county-wide.”
He said rider numbers are up 2 percent over last year despite having fewer routes this year. In January 105,500 riders used the ECO’s 31 buses, up over the 91,000 from a year ago.
Like every other business, ECO will need to pare costs if fuel prices continue to increase. Lair said some routes may be cut and he’s examining overtime and other expenses.
So why is the cost of gas skyrocketing?
“It’s global. We’re now being affected by global events,” said AAA’s Greer. “There’s a lot of anxiety about what is going on.”
Those events include plenty of things beyond our control like the weather.
A cold winter in the eastern U.S. forced oil refineries to shift some of their production from gasoline to fuel oil to meet the demand. A national strike in Venezuela, which supplies the U.S. with 13 to 15 percent of its oil, has also had an effect. That may have been partially offset by an increase in oil production by the Organization of Petroleum Exporting Countries, Greer said.
The U.S. uses approximately 75 million barrels of oil a day, Greer said, and approximately 65 percent of that is imported.
Cliff Thompson can be reached at 949-0555 ext 450 or firstname.lastname@example.org