WARNING: You’ll pay more at the pump this summer
Gas prices topped $1.50 per gallon here last week and are on track to hit $1.80 per gallon or more by Memorial Day, according to federal energy officials. The price spike has some in Rhode Island’s Congressional delegation calling for President Clinton to release oil from the nation’s strategic reserves. But, back home in the Ocean State, local tourism officials and businesses mostly are unfazed.
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The state’s $2.5-billion tourism industry is heavily dependent on visitors that arrive by car.
“If you live in Boston or New York and you want to come to Rhode Island, you may think twice about the gas prices but you’re not as likely to cut out your vacation,” said David DePetrillo, director of tourism at the Rhode Island Economic Development Corp.
Anne O’Neill, president of the South County Tourism Council, also doubted higher gas prices are enough to keep visitors from Southern Rhode Island’s many beaches, camp grounds and golf courses this summer.
“I think if you consider a family of four in the car, and they’re paying 50 cents more for a gallon of gasoline, I don’t think in the big picture that’s going to be a hindrance,” O’Neill said.
The Newport County Attractions Association came to the same conclusion at a meeting this month, noted Linda Naiss, who manages The Astors’ Beechwood Mansion in Newport.
The average price of a gallon of regular unleaded gas hit $1.52 early last week, according to a survey by the State Energy Office. A separate survey conducted a day later by AAA Southern New England put the average price at $1.54 per gallon, the highest price ever, not considering the impact of inflation.
Observers blame the price spike on deep cuts in oil production by members of the Organization of Petroleum Exporting Countries. The resulting shortage has sent crude oil prices skyrocketing from about $11 a barrel early last year to roughly $32 a barrel today.
The soaring gas prices on top of last month’s record-high home heating oil prices, made worse by a shortage of fuel oil brought on by overoptimistic winter forecasts by many oil suppliers had U.S. Sen. Jack Reed and U.S. Rep. Robert Weygand pressing President Clinton to dump oil into the market from the nation’s 570-million-barrel Strategic Petroleum Reserve. “You could probably release 30 million barrels in one month and that might be enough to offset the lack of production,” figured Weygand, a Democrat representing southern and western Rhode Island.
But, he added, refining the oil into gasoline could take as long as two months and such a move might provoke a backlash from OPEC members, whom the Clinton administration has been pressuring to increase production. OPEC officials are scheduled to meet on March 27, and the president isn’t likely to tap into the oil reserves before then, Weygand said.
So what happens to gas prices in the meantime?
“I hate to try to estimate, but I think by Memorial Day it could be extremely high; some people say it could be as high as $2 a gallon,” Weygand said.
U.S. Energy Department analysts expect average national prices to reach $1.80 per gallon early this summer–the busiest part of the driving season, according to AAA Southern New England in Providence.
“From our perspective at AAA, we’re starting to become concerned that, should prices get up to that level, it may start having an adverse impact on tourism,” spokesman Dave Raposa said.
The cost of driving to Newport from the New York City area for a long weekend could jump by more than 80 percent this summer compared to last year if the $1.80 projection is on target.
Making the roughly 380-mile round trip in the popular Ford Explorer, for example, required less than $20 in gas money last summer assuming the sports utility vehicle averaged 19 miles per gallon on the highway as indicated by the manufacturer. Today the trip would cost more than $30, and by Memorial Day it could cost $36.
Naiss of The Astors’ Beechwood Mansion isn’t worried that an extra $16.20 in fuel is going to keep New Yorkers at home this summer.
AAA’s Raposa agreed that the math alone probably isn’t enough to put a crimp in the flow of tourists into Rhode Island, but he said rising gas prices may well present a psychological barrier to leisure travelers.
“It may be $1.60 or it may be $1.80, but there’s a price where somebody looks at that pump and says to himself, ‘Well, we were talking about making that trip this year, but maybe we won’t do it,’ ” he said.
University of Rhode Island economist Timothy Tyrrell, who compiles tourism statistics for EDC said researchers in Massachusetts once examined the impact of the gas shortage in the late 1970s on New England tourism.
“The summary would be that when that gas crisis happened, people reduced their travel early in the season,” Tyrrell said. “But when the supply returned, people came back. It didn’t seem to have a lasting impact.”
Saudi Arabia, Venezuela and Mexico already have agreed to recommend production increases at the March 27 OPEC meeting. An immediate 1.7-million-barrel-a-day boost in oil production, for example, could push prices below $26 a barrel by the end of the year, according to Energy Department analysts. But the reduction couldn’t be achieved in time to hold down gas prices this summer.
Although it’s already too late to head off this summer’s expected price spike, Weygand is looking ahead to long-term solutions such as establishing a New England oil reserve and reducing the region’s reliance on gasoline.
“When people are driving SUVs that are 22 feet long and guzzling 12 miles to the gallon, it’s not very productive,” he said.
