Expensive Gas Could Squeeze Vacation Industry

April 11, 2006 — -- The expected climb of gas prices to near historic levels could have consequences for many businesses that make their money off Americans' summer vacation travel.

The U.S. Energy Department's seasonal outlook on gas prices, released today, projects that this summer the price for regular-grade gasoline will average $2.62 a gallon, about 25 cents higher than last summer.

Gas prices have skyrocketed since February and jumped nearly 34 cents in the last four weeks, to an average price of $2.68 for a gallon of regular unleaded gas. That's 40 cents higher than the same time last year, not a good sign with the summer vacation season right around the corner.

Americans typically don't cancel vacation plans due to increased travel costs, preferring instead to cut back in other areas or finance vacations on credit and pay them off later. So far, despite the higher prices and the early predictions for a sustained run of expensive gas, few in the industry have noticed a drop-off in business.

"It would appear that the higher price of gas hasn't had much effect yet. In fact, we've seen no indication that it's had an effect at all. But of course that could change if prices keep climbing," said Pat Funk, spokeswoman for the Association of Retail Travel Agents.

Some in the industry said that any increase above the government forecast could put pressure on the travel and tourism businesses.

"High gas prices affect your daily pocketbook and daily budget more than people's vacation plans," said Cathy Keefe, spokeswoman for the Washington-based Travel Industry Association. "But I think we might see $3 gas all summer, and that could really throw a glitch into things. That's 30 cents more per gallon than last year."

The TIA estimates that 82 percent to 86 percent of American summer vacations are driving vacations, with the average length being about four nights. Last year, when gas prices climbed, the organization estimated that the higher prices tacked an extra $40 to $45 onto the total average vacation expense.