Peak Oil – less tourism?

The Government of T&T has chosen tourism as one of the economic pillars for the country’s diversification away from energy. So much so that we are creating in Trinidad waterfront hotels and a conference centre with the hope also of attracting the business tourist, and the more general kind to Tobago.

These plans are consistent with current annual growth forecasts for tourism which, according to the UN Tourism Organisation, are 3.8 per cent for regional and 5.4 per cent for long haul traffic – i.e. by 2020 some 1.6 billion people will be involved in international travel. These figures unfortunately do not take into consideration the phenomenon of Peak Oil which is manifesting itself in escalating fuel prices due in general to reducing production and increasing demand for oil.
Present consumption of petroleum is of the order of 30 billion barrels of oil per year, and of that, 84 per cent is converted to fuels, and jet fuel alone consumes two billion barrels per year with the attendant global warming. The UK, in planning the expansion of its airports, is expecting passenger volume to double by 2015 and triple by 2030. Airbus (an aircraft manufacturer) is expecting an annual growth rate of 4.5 per cent. However, with Peak Oil it is now being estimated that by 2030 only 60 per cent of passenger and 45 per cent of freight requirements will be met and these services will be provided at exceedingly higher prices. Surely then Peak Oil, as it is doing for food prices, will have an alarming impact on the tourism industry (particularly cruise ships that drag “hotels” along) that is at present the life blood of the region and one of the proposed pillars of our economic transformation.

In some quarters there is hope that heavy oil and bio-fuels will solve the shortage problem. As a result we are seeing agricultural lands being diverted to the production of corn for ethanol and investments in the heavy oils of Canada. However, neither of these will be available in the same quantities as conventional petroleum, and, basic scarcity economics tells us that both bio-fuels and heavy oil derivatives will sell at prices comparable to fossil fuels. Ethanol and even methanol-based fuels will not be cheap substitutes for petroleum unless subsidised by governments.

There are two obvious conclusions from the above – with increasing costs of travel (due to increasing fuel costs) potential tourists (except the very rich) will re-consider travelling to distant traditional and/or exotic destinations, and countries will have to examine their tourist markets (sources of tourists) to decide on which markets and kinds of tourists to encourage.

Trinidad Express