Gas prices are rising in Myrtle Beach. It’s weird, but that’s good for tourism. Here’s why
Two years ago, the world shut down and ended up with so much excess oil that it didn’t know where to put it all.
Gas prices tanked to below $2 a gallon in many places across the country.
Now, we find ourselves with exactly the opposite problem.
Demand for fuel is quickly outpacing supply and petroleum producers have been slow to increase their output. And that oil glut everyone talked about in spring 2020? It’s gone.
For Myrtle Beach, that’s played out in a rapid rise in fuel prices in recent weeks. The average price per gallon rose nearly 30 cents in the last three weeks, putting the area at close to a dollar more compared to a year ago, according to GasBuddy, which tracks fuel prices daily around the nation. As of Monday, the average price per gallon in the Myrtle Beach area was $3.32. That’s slightly higher than rest of the state: $3.29.
It might not make a lot of sense at first, especially since the vast majority of Myrtle Beach visitors drive there. But high gas prices could be a good thing for tourism in the area, experts say.
What?
Yeah, it’s weird.
Coastal Carolina University hospitality professor Taylor Damonte said that over the years, he’s noticed a positive correlation between fuel prices and how busy the region gets during the peak travel season.
“The more fuel prices go up, the more occupancy goes up, and the more occupancy goes up, fuel prices go up,” said Damonte, who is the director of CCU’s Clay Brittain Jr. Center for Resort Tourism. “I’m not saying that it causes demand for travel to increase. I’m just saying there has been a relationship historically between occupancy and fuel prices.”
What’s unclear is whether the two are actually connected. Nevertheless, Damonte said fuel prices have long been a sign of a busy tourism season.
If the two are connected, there are several factors that could explain it, Damonte said.
To start, the price of oil affects almost every part of the economy.
When oil costs more, the price at the pump goes up, which means transportation in general is more expensive. That affects the cost of shipping, which can increase the price of food, clothes, everything. As a result, when gas prices go up, many other purchases get more expensive, Damonte said. It creates a multiplier effect that eats at consumer wallets.
“Fuel is like a tax on everything. It increases the cost of living. It increase the cost of doing business. It increases the cost of everything,” Damonte said.
The immediate thought might be that consumers just wouldn’t take vacations if everything is more expensive. However, Damonte said that’s rarely the case. People still want to get out of the house, particularly after being cooped up during the pandemic. Instead, rather than not taking a vacation at all, Damonte said travelers just book less pricey trips.
Looking for a cheaper vacation? That’s Myrtle Beach’s No. 1 calling card.
“There could be one direct impact, on the other hand, the Myrtle Beach area is not just any vacation destination,” Damonte said. “
Myrtle Beach is a one-day drive from some of the most densely populated parts of the country and provides a wide range of leisure services that for decades have been much less expensive than other vacation destinations.
“(Consumers) could conceivably be looking for ways to cut costs while still purchasing” a vacation, Damonte said, “and there’s tremendous pent up demand for it from the last two years of demand restrictions due to the pandemic.”
“It may be that that that is part of the reason that Myrtle Beach has has come out of the pandemic slump sooner than other vacation travel destinations,” he added.
The last two years, however, have seen wide fluctuations in the cost of hotel rooms and other hospitality offerings, such as dining out at a restaurant.
Food is a lot more expensive and restaurants are passing that cost onto consumers. The average cost per night for a hotel room last summer reached $260, one of the highest prices the region has ever seen.
It begs the question of whether Myrtle Beach will maintain that status as an “affordable” vacation destination.
“Do we run the danger of as our prices go up, pricing us out of the market? There’s always that danger,” Damonte said. Hotel and restaurant “operators will always, on a daily basis, push that limit to see where the pricing power (is). But how much pricing power do they have?”
Fuel prices, despite their recent spikes, have still not reached the stratospheric highs of close to $4 per gallon average for the nation. And even in those days, the late 2000s and early 2010s, gas prices still didn’t deter tourists from visiting Myrtle Beach, Damonte said. Instead, the region’s popularity only grew.
“It’s counterintuitive,” he said. “But gas has been a higher price than it is now here and nationwide. And still, even during those times, we did not see a negative correlation between pricing, fuel pricing and demand.”
Part of the reason gas is so expensive is because oil producers have not increased production to match demand, GasBuddy’s head of petroleum analysis Patrick De Haan said in an interview. The federal government often blames low oil production on other countries, but even at home, the nation still hasn’t reached pre-pandemic levels for oil production.
Before the pandemic, the U.S. was producing about 13 million barrels of oil a day. That fell to 10 million at the height of the pandemic in 2020.
But nearly than a year after vaccines became widely available and the country started its biggest phase of reopening, the U.S. is still only producing 11.5 million barrels — 10% less than pre-pandemic, De Haan said.
Part of the reason for maintaining lower production, De Haan said, is that oil companies are still wary of losing money again. Many of the major producers lost billions during the pandemic when demand tanked. They might be using the currently inflated fuel prices to recoup some of those losses.
“They’re being a little cautious,” he said. “They want to see positive economic growth. Not only that, but a lot of them let go tens of thousands of workers back in the height of the pandemic, so they had long term decisions early on that are hard to bounce back from very quickly, given the overall labor challenges.”
Hospitality businesses — hotels and restaurants — aren’t worried about the rise in gas prices, either, Damonte said. Right now, they are trying to solve bigger problems, such as worker and supply shortages.
De Haan said people will likely quickly get used to the prices anyway.
“Usually when prices go up, there’s an initial sticker shock,” De Haan said. “There may be a slight hit to demand this year, but next year, if the prices are similar, people get adjusted to it. They don’t like it, but it’s less of a it’s less of a shock to them.
“There’s been so much of inflation, broadly speaking, across the economy that that people are just kind of expecting it,” he added.
When will prices finally get better?
That’s still likely a few years away, De Haan said. Consumers should expect gas prices in the $3 range for many months to come.
Regardless, both Damonte and De Haan said most forecasters are even expecting this summer to be a banner year for tourism.
The Grand Strand, come spring break, could be busier than ever.
