Average gas prices drop – not likely to affect tourism

By Jim Hulen, North Myrtle Beach Online.com

June 19, 2012 North Myrtle Beach, SC – AAA put the U.S. average at $3.505 per gallon on Monday, down 3.5 cents from a week earlier. The Energy Department pegged the national average at $3.533, down 3.9 cents from a week earlier.  

At $3.077 per gallon, SC posted the lowest statewide average gas prices in the AAA survey.  In North Myrtle Beach, according to Gas Buddy, purchasers can get gas for $3.04 per gallon at the BP on 6th avenue and $3.05 at Boulineau’s Shell on Sea Mountain Highway.  Last week, Fox News ran a news snippet about gas prices less than $3 in Conway, reporting drivers lined up to purchase a perceived anomalous bargain.  Gas Buddy reports that Conway continues to provide the area lowest prices. Monday’s price was $2.92 at the Save Mart on Grainger Boulevard.  

When gas prices drop it is good for the tourism industry – right?

Not necessarily.  Gas pricing is a function of worldwide demand driven by a lot of different factors.  While in the past a major driver was economic growth. High growth economies consume a lot of gasoline moving products around and driving up prices. Low growth does just the opposite.  

However, according to Marion Edmonds, spokesman for South Carolina Parks, Recreation and Tourism (SCPRT), falling gas price are not necessarily good or bad news. SCPRT has looked at the relationship, not just in SC but elsewhere and found that when the changes are not extreme, gas prices do not have an impact.  “But when they are large, people make adjustments – how far they will drive, how many days they will vacation and whether they will go to fancy restaurants.  When it is slow as it is now, people integrate it into their planning.”

The difference between a $3 and $4 per gallon gas price is not consequential.  It will cost someone driving a vehicle getting 20 miles per gal only $9 more to come here from Charlotte, $33 from Cleveland, Ohio, $21.50 from Charleston, WVA and $17.50 from Atlanta, GA.  Those are not deal making numbers.

A significant factor that Edmonds noted did impact travel is when high gas prices reflect the reduction in the availability of gasoline, like when Hurricane Katarina disrupted supplies in 2005.

Commenting on the relationship of gasoline prices with economic growth, Edmonds noted that the relationship used to be stronger than it is now.  “Significant improvement in vehicle fuel efficiencies – some doubling mileage – and the introduction of natural gas into the fuel mix is changing the relationship.”  These two factors along with the decline in demand in Europe and Asia are helping slowly lower gas prices observed Edmonds.

Edmonds concluded that SCPRT is looking for a good summer for the tourism industry but not remarkably higher.

Agreeing with Edmonds that gas prices don’t necessarily determine whether people will go on vacation or book a golf package is Carson Courage, Myrtle Beach Golf Directors.  “It’s the confidence they feel in the economy.”  He too points out that his clients have already integrated gas prices in their everyday life and that includes vacation plans.