Cortez Journal

High fuel prices could deter tourists

March 28, 2000

Pumping Gasoline

Journal/Bob Fitzgerald

DON GREEN, of Monticello,Utah, waits while filling his gas tank Monday at Maverik Country Store on U.S. Highway 666 in Cortez.

By Jim Mimiaga

High gas prices nationwide could deter some tourists from driving to the Four Corners this summer, tourism officials say, but Colorado’s recent population boom and the country’s superheated economy should help to mitigate the negative effects.

"Unless prices go down, it could prevent some people from coming out here because we are primarily a ‘drive’ market," said Lynn Dyer, coordinator of the Umbrella Tourism Committee. "But on the other hand, the economy is so good right now that people have more to spend, so higher gas prices might not really matter."

The fickle tourism industry is tough to predict, Dyer said, although the theory is that as newcomers continue to flock to the urban Front Range, they will take vacations within their own state first, especially since higher fuel prices also translate into higher-priced airline tickets.

"They have a whole new state to explore and places like Mesa Verde in the Four Corners are close by, so I think that we will see a lot of Colorado plates this summer," Dyer said.

Without adjusting for inflation, the recent surge in gas prices is the largest on record, with some stations in Cortez charging up to $1.80 for a gallon of premium unleaded. The fuel-price pendulum is swinging the opposite direction from March 1999, when the price for crude oil was $10 per barrel.

Consumers were celebrating at this time last year, when gas prices reached record low levels that, at some stations (but not in Cortez), dropped below a dollar per gallon.

But as of Monday the commodity had hit $27 per barrel, an increase caused by decisions made by the Organization of Petroleum Exporting Countries (OPEC), the conglomerate of oil-producing countries in the Middle East that controls the world’s oil supply.

Over time those decisions have filtered down the production chain, translating to higher prices at the pump, explained David Fraley, a regional fuel distributor, market analyst, and president of Fraley and Company in Cortez.

"OPEC oil producers made a pledge to cut production because supply was too high, partly because the Asian crisis in 1998 led to less growth, hence less demand than expected for energy resources," Fraley said. "Unlike past managers, OPEC stuck to their decision this time and it basically took until December 1999 before the world worked off their excess inventory."

The tight supply led to a jump in commodity futures for the natural resource. Refineries had to charge more to distributors and local gas stations had to raise prices in order to maintain profit margins, Fraley said.

At a production meeting that began yesterday in Vienna, Austria, OPEC discussed boosting production to balance out supply and demand in the world’s oil market. Talks are expected to continue today.

If OPEC boosts production as expected, it will be months before Cortez sees lower prices at the pump, Fraley predicted, because tankers need time to ship the lower-priced oil to refineries which must still use up inventories bought at the higher price.

In the meantime, commuters will continue to feel the pinch and cross-country road trips to the Southwest may be canceled in favor of less costly destinations.

The agricultural industry will also suffer if the price for crude oil does not level out by fall harvest, said Mike McCabe, transportation director for Hay Hey Ladies, a local alfalfa broker and distributor.

"It will hurt everyone — the farmer, distributors, buyers," McCabe said. "Truckers can’t afford to ship it at the transportation cost as it is, so it is becoming more difficult to get truckers to even come around during harvest. They want a fuel surcharge for the freight, but we can’t afford to pay it without it cutting into our commissions."

A quick tour of Cortez gas stations showed prices ranging from $1.56 for a gallon of unleaded to $1.81 for a gallon of premium. Maverik offered the lowest per gallon, at $1.56 for regular unleaded if paid with cash.

At 7-2-11, the same gallon cost $1.57, and the Shell station on Highway 666 posted the highest price per gallon of regular unleaded at $1.61, with premium hitting $1.81.

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