DEL.ICIO.USGas price dip lightens load on economy
The Atlanta Journal-Constitution
Tuesday, May 12, 2009
Any kid roaring around the go-kart track at Dixieland Fun Park can inform you on the economics of gas prices: lower prices equal longer rides.
A year ago, if you wanted to ride, you had to buy four tickets — the equivalent of $4.80. This year, once you are admitted to Dixieland, you have unlimited rides.
Brant Sanderlin/bsanderlin@ajc.com
Matthew Schreiner, rider operator supervisor at Dixieland Fun Park in Fayetteville, fuels go-karts at the fun park. Due to high gas prices last summer Dixieland was forced to limit the number of rides. This year it plans to return to unlimited rides with regular entry fee.
Lower gas prices have also persuaded the 19-year-old Fayetteville park to mount an ambitious effort to draw customers from a radius of 50 miles, placing billboards as far off as Gwinnett County, said spokeswoman Nani Mathews.
“If gas was $4 a gallon, maybe we’d only go for 35 miles,” she said.
“Here, we can offer unlimited go-karts because gas prices are reduced. So it [the low price] helps our business in more than one way.”
(The park is open weekends and Memorial Day but not seven days a week until June and July.)
Lower gas prices take pressure off the economy in general, lightening the load for companies and consumers while giving a business like Dixieland room to maneuver.
True, gas prices have been rising of late, thanks to the refineries’ shift to more costly summer blends, rising oil futures and an uptick in consumer demand as vacation season approaches.
The average price of regular gas, which had slipped as low as $1.45 a gallon in the winter, was up to $2.17 by Tuesday, with a 29 cent-a-gallon jump coming in the past week and a half, according to Gas Buddy.com.
Later this summer, it will climb to roughly $2.50 a gallon, predicts AAA, the nationwide drivers organization.
Yet that looks like a hefty discount compared to a year ago when gas was selling for $3.71 a gallon and prices were still rising.
Though they slipped in late summer, they crested once more, hanging above $4 for weeks.
Those high prices had some dramatic and painful effects. First, people drove less — millions of miles less than the year before. In Georgia, driving was down nearly 6 percent last year, according to the Federal Highway Administration.
Among the nation’s metro areas, higher prices had the most effect on traffic in Atlanta, according to a study by Inrix Inc. of Kirkland, Wash.
One reason: the number of solo drivers who signed up for carpooling and other programs tripled in metro Atlanta last year, said Kevin Green, director of the Clean Air Campaign.
Meanwhile, higher prices were like a lead weight in consumer wallets, dragging down spending through late fall and winter.
And that helped deepen the recession by hurting retailers. So this year’s lower prices should reverse some of those effects.
With the coming holiday, American vacationers will return to at least some old habits, said Jessica Brady, AAA spokeswoman.
“You could well see an increase of people traveling this Memorial Day,” she said.”
AAA on Tuesday released its annual Memorial Day projection, predicting that 32.4 million Americans will travel this holiday, up 1.5 percent from last year.
Yet the pain of paying $4 a gallon for gas and — worse — the hassle and uncertainty of shortages and gas lines have not faded completely.
And those bad memories have been reinforced by recession and the need to squeeze pennies.
Consumer demand for gas this summer is expected to be up just a half-percent, said Michael Morris, industry economist for the Energy Information Administration.
“Last year’s consumption was pretty weak,” he said. “So increasing a little bit above that is not that much to write home about.”
And while applications for carpooling programs now are down 44 percent from year ago, telecommuting programs are up 67 percent, Green said.
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