Tourism’s exposure to Global Oil Price

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Tourism’s exposure to
Global Oil Price
Susanne Becken (2008), Environment, Society & Design, Lincoln University,
Contact: beckens@lincoln.ac.nz
In partnership with Covec Ltd
and Landcare Research, and
with support from the Tourism
Industry Association and the
Ministry of Tourism. Funded by
the Foundation for Research,
Science and Technology.
Source: www.aspo-ireland.com
Background
Tourism is an increasingly important economic activity globally. At the same time, it is extremely
dependent on oil, not only for tourists’ mobility but also for other core elements of tourism such as
recreational activities at the destination. Forecasts for tourism growth are generally optimistic, but
they fail to take into account potential changes in global oil price and effects on arrival numbers. It is
timely to consider how tourism might change given incremental or rapid increases in oil price.
Project Aim:
Peak oil means that the maximum global
petroleum production rate is reached.
Following peak oil the rate of production
enters its terminal decline. Current oil
production is about 30,000 m barrel per
year.
To inform the implementation of measures that manage the risk of increasing oil prices to allow for
continued economic yield from international tourism. Research questions are:
1. How will the price of air travel to New Zealand and tourism products in New Zealand change as
the price of oil changes?
2. What are the implications of different oil price scenarios for the number and mix of arrivals into
New Zealand?
3. How will different visitor markets respond to changes in the price of tourism products?
4. Which tourist types, products and destinations are most vulnerable to changes in oil prices?
5. What adaptation measures can be implemented by government agencies and tourism
businesses to reduce the oil price vulnerability of the inbound tourism market and the New
Zealand economy as a whole?
Global Tourism consumes the equivalent
of about 3,000 m barrel of oil per year,
emitting 1,307 Mt of CO2. The emissions
correspond to about 5% of global CO2
emissions. Seventy-five percent of this is
for transportation.
New Zealand Tourism requires the energy
equivalent of 3.3 million barrel of oil
domestically and 14.1 million for
international tourists’ return air travel per
year. NZ imports about 43 million barrel of
oil per year.
Methodology
The research methodology comprises several steps:
•
Modelling the relationship between global oil price, demand for tourism in New Zealand, and
international visitors’ consumption patterns within New Zealand (build a Tourism Sector
Model with appropriate market segments)
•
Establishing how global oil price affects prices and quantities of different tourism products in
New Zealand, and how this impacts upon the sector as a whole and the wider New Zealand
economy (analysis of oil as an input into production and price elasticities); this step involves
the development of a Tourism General Equilibrium Model;
Identifying high-yielding tourism industry adaptation and policy responses to reduce exposure
to higher oil prices and maximise competitive potentials in an ever changing environment (in
partnership with stakeholders).
•
1,200,000
Forecast arrival numbers by key markets to NZ
1,000,000
Australia
Americas
Japan
NE Asia
Rest of Asia
UK/Nordic Ireland
Europe
World
800,000
600,000
400,000
Distance travelled (km) within NZ by different segments
200,000
2200
2000
Carkm (mean)
1800
Airkm (mean)
0
2004
2005
2006
1600
1400
1200
1000
Fuel prices (cents) in NZ
180.00
160.00
800
140.00
600
120.00
400
100.00
200
80.00
0
60.00
40.00
20.00
0.00
Regular P etro l Retail
Regular Other fuels (i.e. diesel)
Who lesale Diesel
2008
2011
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