Tourism May Suffer Greatly as Gas Prices Predicted to Soar

A new report from Bank of America to CNN has leaders in the tourism industry deeply concerned. According to Bank of America, oil prices are likely to rise by another 45%, despite gasoline already being at a seven-year high and over $4.00 per gallon in some states across the country. This potential rise, predicted by Bank of America by June 2022, would effectively raise the average cost of a gallon of gas in the United States to about $5.00 per gallon. For those of you keeping stats, that would annihilate the previous record for average cost of gasoline which currently stands at $3.64 per gallon.

We’ve already covered on That Park Place how supply chain issues and inflation are threatening to stifle a tourism industry comeback, but even those are dwarfed by the danger of record-smashing gasoline costs. Why? Because when gasoline costs rise, the cost of everything rises behind it as a result of energy being required for the production of every imaginable item or service. If gas rises an incredible 45% from its current near-records, inflation could easily enter into a period not seen since the Jimmy Carter administration.

For tourism, coming out of a pandemic, the timing could not be worse. Already, news reports are out there warning that current fuel costs are threatening the industry. The idea of having to pass fuel costs onto the customer for staggering oil prices would be catastrophic for an industry that was essentially shut down for more than a year. While larger corporations might be able to hold their prices for a bit longer, smaller companies and local tourist locales would have no such luck.

“Last year at this time, many people wondered if they could safely gather with their extended family as the coronavirus raged unchecked.

This year, they’re trying to figure out if they can even afford to get there.

Just look at what’s been happening with the price of gas. ‘We’re actually about $1.20 higher than we were last year in Massachusetts, and the average driver is now paying about $17 more per fill-up per tank,’ explained Mary Maguire, Director of Public and Legislative Affairs for AAA-Northeast.” — MSN.com

With Barron’s now recommending investors get out of bonds due to inflation and economic stagnation, they’re suggesting people might look to energy funds and stocks as a way to protect against degradation of their capital value. That’s fine for individuals and companies that can do so. But when it comes to hotels, local restaurants, and leisure locations, there’s no shifting away from their capital assets, from their real estate, from their services. And all of that will be heavily impacted if fuel prices soar to the numbers predicted by Bank of America. It is not an overstatement to say that government officials should be doing everything in their power to ease fuel cost prices unless they wish to see the tourism industry decimated by a double-whammy of pandemic and record-level energy costs.

Needless to say, if gasoline is at $5.00 on average across the country, it’s going to be far higher in certain states. Does anyone think the locales along Route 66 are going to enjoy road trippers disappearing? Who is going to be able to afford flying as jet fuel is directly tied into oil prices? It’s the middle class that drives most tourism (by far), not the elites who will be less affected.

BIDEN: The increase in gas and oil prices is "the consequence of the refusal of Russia or the OPEC nations to pump more oil." pic.twitter.com/A5Gg5L0eee

— X Strategies LLC (@XStrategiesLLC) November 2, 2021

For those dependent on fun-searching visitors, the heartache of the past two years may not be ending any time soon.