Another statistic is showing us the damage high costs for a gallon of gas is doing to tourism, vacations and travel. How much more can the industry take?
You may be enjoying the slight decrease in gas prices that is predicted to rise again later in July, but just know the 5% drop in fuel costs is signaling something more troubling. According to the Wall Street Journal’s Omar Abdel-Baqui, the reason for the small dip in gasoline prices is because people changed their plans about the July Fourth holiday. Writers at this website have been hearing that tourism dropped over July Fourth (with two notable exceptions: Dollywood and Walt Disney World) and destination locations have seen more sparse crowds than usual. Now we’re getting the numbers that back that up.
The average cost of a gallon of unleaded gas was $4.75 Thursday. That’s down about 5% since prices hit their highest point, $5.02, on June 14, according to data from OPIS, an energy-data and analytics provider.
The drop is primarily due to diminished demand at the pump, according to a AAA report released this week. An increased supply of gas and lower oil prices have also contributed to the recent price drop, AAA said. Crude oil futures were at about $102 a barrel Thursday evening, down about 16% in the past month.
Gasoline sales leading up to Independence Day trailed previous years. Same-store gasoline demand by volume fell about 7% for the week ending July 2, compared with the same period last year, according to OPIS data. Demand that week was down about 13% compared with the same period in 2019. In mid-to-late May, gasoline demand fell to its lowest levels in nearly a decade, according to government data.
Wow. Really, wow. What we’re looking at for the biggest vacation holiday of the year is a 7% decline year-to-year from 2022 to 2022. Worse, if we go back to before the pandemic, we’re looking at a travel decrease of 13% to our current year. What that means is that people are bailing on vacations or scaling back travel distances to compensate for rising costs. In other words, one of the industries slammed hardest by the pandemic (tourism) is being slammed again as we exit the pandemic and get into a potential recessionary stage.
Unfortunately this doesn’t seem to be making waves much around the mainstream press. Nobody is talking about the damage this is doing to the cities and lodges that depend on people driving their way. Looking around to see what others are saying, all we could find was an article by Ed Morrissey on Hot Air where his commentary matches what I’m worried about:
So enjoy the brief respite at the pumps while it lasts, because it likely won’t last long. Even if it does, it will be from a continuing falloff of demand in the summer, which would mainly result from a decline in consumer spending on vacations. That will be bad news for other parts of the economy, not to mention the emotional health of American households.
So all I know to do is to tell those mom and pop locations dependent on travel and tourism to hang in there. It’s going to be a tough road for a while yet. Maybe we’ll come out on the other side with lower energy costs and happy families flooding your turnstiles yet again. In the meantime, it’s a button-down-the-hatches tourism economy.
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