Analysts discuss gas prices, impact on tourism

By: Eric Czarnik | Sterling Heights Sentry | Published April 4, 2016

 Vineyard field in Old Mission Peninsula Michigan.

Vineyard field in Old Mission Peninsula Michigan.

Le Do / Shutterstock

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Michigan State University analysts and professors expect the recent trend of cheap gas prices to continue to have a positive effect on Michigan tourism this spring and summer.

AAA reported that the average gas price in Michigan was $1.96 per gallon as of March 27, though gas prices in some areas of Michigan recently climbed above $2 for the first time in late March.

Steven Miller, director of the Center for Economic Analysis at Michigan State University, said gas prices have been suppressed for around a year and were “relatively tame” even a couple of years leading up to it. He said around this time last year, he expected gas prices to be closer to somewhere between $2.50 and $2.80 per gallon. 

But barring any big Midwestern refinery issues, he sees U.S. gas remaining cheap “for the foreseeable future” due in part to Saudi Arabia’s recent announcements.

“Michigan is not unique in experiencing low prices, as this is a global event, partially driven by competition for market shares of large oil-producing countries and partially by uncertainty in global demand for crude oil,” Miller said in an email.

“Keep in mind that Saudi Arabia is a low-cost producer of the crude oil that goes into gasoline, and they appear to not be too happy about Iran re-joining the ranks of unfettered global suppliers of oil.”

Miller, who said he anticipates Michigan drivers hitting the road this year, said cheaper gas prices tend to correlate to buying more fuel. On the other hand, he said vehicles have on average become more fuel efficient over the years — though he attributes a recent leveling off to some shoppers returning to larger vehicles.

Michigan State University associate professor Sarah Nicholls works in the departments of Community Sustainability and Geography, and she is also chair of the Ingham County Parks & Recreation Commission and coordinator/facilitator of the 2012-2017 Michigan Tourism Strategic Plan.

Nicholls said she just attended an annual meeting to discuss tourism, and she said that cheaper gas prices played a role in a “fantastic year” for state tourism last year. 

She said around 90-95 percent of Michigan tourism comes from American travelers, and about half of that is from Michiganders, who predominantly travel via automobile. However, she said out-of-state visitors come to Michigan too due to the Pure Michigan tourism campaign’s success.

“As the auto manufacturing capital, I think we have a huge potential to embrace the notion of the classic American road trip,” she said.

For people who wish to enjoy a road trip, Nicholls recommended the stretch of the M-119 highway from Harbor Springs to Cross Village.

“The ‘Tunnel of Trees’ is probably our most iconic drive,” she said.

Other ideas that she gave include Pierce Stocking Scenic Drive in Sleeping Bear Dunes, as well as peninsulas such as Old Mission and Keweenaw. 

“The east side of the state, that entire coastline, probably gets most overlooked,” she added.

Get AAA fuel reports by visiting www.fuelgaugereport.com. To learn more about road trip ideas in Michigan, visit www.michigan.org/road-trips.

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