Bob Navarro’s last gas was $30 (he shrewdly invested in a hybrid), but that didn’t stop him from nervously watching the gas top $4.50 a gallon.
Navarro, President and CEO of the Heritage Corridor Convention & Tourist Bureau, knows that fuel prices determine travel plans. Will record natural gas disrupt tourism? Two years ago, tourism pumped $1.1 billion into six counties in north central Illinois?
Navarro pored over the data, arguing that fuel costs might actually boost local tourism. He conceded that Chicagoans will slash their budgets, but that would make near-home attractions like state parks more appealing than venturing out of Illinois.
“People are still traveling, they’re still traveling by car, but they might not stay for seven days, they might stay for five days,” Navarro said. “Last summer, we did well and we’re preparing to be just as strong. Those numbers look good to us.”
Tourist numbers, that’s it.
Motorists cringe at the pump — diesel prices were found hovering north of $4.50 and $5 on Friday — and braced for costs to stay high this summer. They may be right: Economist Rick Pretzsch agrees that no relief is in sight.
Fuel prices rose 24% over the Christmas and Easter period and are now up nearly 35%, according to the U.S. Energy Information Administration.
Pretzsch, a professor of economics at Illinois Valley Community College, blamed the global unrest for lasting longer than expected. Russia’s invasion of Ukraine has resulted in a blanket ban on Russian oil that could become permanent if Vladimir Putin remains in power.
“The result will be a continued withdrawal of Russian oil from global markets, with prices remaining high for the rest of the year,” Pretzsch said. “Production prices will start to fall back as U.S. and other producers ramp up production, but it will take time for the U.S. and other producers to ramp up oil production significantly.”
Translation: Do not seek any serious relief on the pump for the rest of 2022.
“It seems to me that by next spring at the latest, we may see oil prices start to come down,” Pretzsch said.
How will drivers adapt? Molly Hart is a spokeswoman for AAA, the Aurora-based Auto Club Group, which found motorists won’t be staying home this summer.
AAA surveyed its members and found that despite record gasoline prices, 84% of respondents plan to take 50 miles or more of road trips this summer. Motorists certainly look for places to save money, but they are more likely to travel less (31% of respondents), shorter trips (21%) and closer to home (24%).
That’s a big deal for Starved Rock Country, which is close to America’s third-largest city. Starved Rock and Matthiessen State Parks attract more than 1.1 million visitors during the summer months alone, and if natural gas prices remain high, it is reasonable to expect above-average visitor numbers.
Airfare has also gone up. Don Grant Zellmer is the group travel director for Travel Connections in Peru. Ten months ago, he booked a group tour at a competitive price. Since then, some laggards have signed up, with Zellmer reporting a “significant increase” in fares, partly due to soaring fuel prices.
Travel Connections feels this too. Zellmer’s bus trip to Branson this past week was booked before gas prices spiked, meaning his lucky clients got a better deal than if they would drive to Branson themselves.
“It’s a great time for a group tour,” Zelmer quipped, “because you’re not burning your gas, you’re burning ours.”
Tourism officials may see a silver lining, but Americans as a whole can look forward to digging deeper into their pockets, not just for fuel, but food, and everything.
Inflation, a hot topic of late, could have serious consequences in November’s polls, although Pretzsch said it was gasoline costs driving inflation, not the other way around.
“When energy prices go up, the cost of everything goes up,” Pretzsch said. “It will cost more to produce your product due to higher energy costs. It will cost more to get your product to market. It will cost more to heat or cool the showroom.
“All of these costs will be passed on to consumers. We call it cost-push inflation, and that’s what the economy will experience going forward.”
The news wasn’t all bleak. Freeing the world from Russia’s oil, gas, and wheat puts the U.S. in the lead as the world’s largest oil and gas producer and a top-five wheat producer.
“However, it’s not like turning on a light switch,” he said. “It will take time for U.S. industry to strengthen and fill this void. I believe that by early next year at the latest, U.S. production will expand enough to fill most of the void and inflation will start to fall.”