7:18 AM
Rapid City (S.D.) Journal | Posted: Wednesday, July 2, 2008 12:00 am
Tourism retailers in the Black Hills region told U.S. Sen. John Thune Tuesday that they are feeling financial pain from $4-a-gallon gasoline.
But today's economic discomfort is nothing compared to the misery likely to come if something isn't done to control the soaring price at the pump and its impacts on the overall economy, the owners said.
Rapid City Mayor Alan Hanks, a campground owner worried about the escalating price of fuel, said during a meeting with Thune at the Black Hills Visitors Information Center that gas prices will reach a point where the very foundations of the travel industry could be shaken.
"I think we're going to reach a tipping point," Hanks said.
Thune said Congress must take action to help control energy consumption, but also needs to find new domestic energy supplies to avert a rise in gas prices to $6 or $7 a gallon. He agreed that there's a point where gas price impacts will be profound.
"I don't know where that number is, but we're getting pretty close," he said.
Hanks and others in the West River travel industry told Thune that most businesses are doing surprisingly well so far, considering the rise in fuel costs and their economic ripple effects. That shows in visitation numbers compiled by Bill Honerkamp, president of the Black Hills, Badlands and Lakes Association.
Honerkamp said tourism fell about 7 percent in the region in May. But numbers were rising in June to levels comparable to 2007, which was an excellent tourism year in the region, he said.
The numbers are mixed at high-profile tourism traditions, including Wall Drug, the Reptile Gardens and Bear Country USA. Wall Drug President Teddy Hustead said the popular tourist stop in Wall was down 1 percent in June. While not a dramatic drop, it's the kind of number a business can't sustain over time.
"Wall Drug needs to be up 4 percent to 5 percent to be a healthy, growing, viable concern," Hustead said. "You need to grow a business. And it's hard to grow a business when gas is increasing by 10, 20, 25 percent every year."
Bear Country is down 7 percent for the year, vice president Sean Casey said. The business and others like it have had to raise rates to maintain themselves financially for most of the last decade, as rising fuel costs and other expenses mixed with slow or no growth in customer numbers to create an ongoing financial challenge, he said.
"We've been even at best in people for a decade," Casey said. "Energy is pinching us. I always joke that we're going to a model like the space shuttle: two visitors at $10 million each."
Lodge rentals have stayed even but campsite traffic has fallen at the Palmer Gulch Lodge, President Al Johnson said. With the simple act of filling an RV gas tank costing hundreds of dollars a stop, some people are leaving their rigs at home, driving a more fuel-efficient vehicle and renting a room, he said.
"Just the thought of the gas price has them parking their RVs and staying in motels," Johnson said.
Jo Casky of the Spearfish Convention and Visitors Bureau is particularly concerned about the effect of gas prices on the many car-related conventions booked in the Northern Black Hills community. A convention of the Pontiac, Oakland Club International, which promotes the restoration and preservation of Pontiacs, Oaklands and GMC vehicles, booked with a prediction of 1,200 to 1,400 attendees, Casky said.
That's unlikely now, because of the rising pump prices, she said.
"We're now at about 800," Casky said. "As soon as gas started getting to the $4 mark, we started to see reservations back off."
Thune listened, took notes and told the tourism operators that they were suffering energy woes because of devalued U.S. currency, speculation in the energy market and, especially, a hungry worldwide demand for oil.
The United States can address that by cutting consumption and developing more domestic oil supplies, he said. More offshore drilling, exploration of Alaska's North Slope and more aggressive exploration and development of oil shale will all give the nation more control over its energy future, Thune said.
Congress is working on those issue now, he said.
"The fact of the matter is, we don't have enough supply, and there's an insatiable demand worldwide for energy," he said.