As part of their master in Tourism Destination Management study program, the students have written literature reviews in the domain of “International Tourism Context”. In this second of six literature reviews Maria Klampfl discusses the consequences of peak oil on global tourism demand.

Introduction

Oil is a finite resource. Though, the global trends in energy supply and consumption are environmentally, economically and socially unsustainable (Matutinovic, 2011, p.1131; 1129). Experts are increasingly warning about the rising energy challenge, the Western civilization and the world as a whole will have to face within the next decade (Matutinovic, 2011, p.1131; 1129; Nell & Cooper, 2008, p.1096). The consequences of less affordable oil on society are inherently complex (Becken, 2010, p.373). In fact, the diminishing oil reserves will put a “definite constrain on economic growth, global distribution of life- styles and the level of integration of global economy” (Matutinovic, 2011, p.1131). It will, furthermore, affect tourism and the way in which it is operating today.

The demand for oil is constantly escalating and it is alarming that while in the past “new oil reserves were discovered at a greater rate than consumption”, at present it is the opposite – new oil fields are detected at a lower rate than consumption (Becken, 2008, p.696). The oil price is influenced by multiple factors. Nevertheless on a long-term perspective, oil prices are “driven by world oil demand and supply, which is ultimately limited by resources” (Becken & Lennox, 2011, p.133). Scare supply of energy is inevitably leading to dramatically increasing oil prices. This will have significant effects on the transport and airline industry and will consequential affect the whole tourism industry (Leigh, 2011, p.165; 167; 169).

Becken claimed, yet there is only little “awareness of energy security and peak production of oil” within the tourism industry (2008, p.695). Furthermore tourism research has largely left out the issue of energy consumption in relation to a long term future of tourism. Accordingly this paper aims to increase the awareness of a possible oil scarcity and investigates the potential consequences of peak oil on the future global tourism development.

Tourism and its oil dependency

Tourism is about the “movement of tourists from their source to the destination”. The inherent transport component makes tourism and its supportive industry “reliant on mobility, transport, and ultimately because of the heavy reliance on air and car transport, on oil as a fuel source” (Yeoman, Lennon, Blake, Galt, Greenwood & McMahon- Beattie, 2007, p.1354;Becken, 2008, p.695; Becken & Lennox, 2011, p.133). In fact, the high energy density and transportability makes oil “the fuel of choice” (Nell & Cooper, 2008, p.1096).

It is assumed, the transportation sector alone “consumes over 50% of total oil per annum globally” (Becken, 2006, p.697). The aviation industry consumption accounts about 6.3% of the world refinery production (Becken & Lennox, 2011, p.133). Anyhow, forecasts of the International Energy Agency (IAE) predict that demand for transportation will advance worldwide, leading to a 20% increase in energy demand between now and 2030 (Becken, 2008, p. 697). It is believed by the World Energy Outlook and others that it is “possible to meet the world oil demand in the coming decade” (Lutz, Lehr & Wiebe, 2012, p. 829). Nonetheless, the “increasing evidence about the immense of a peak in oil production” raises criticism against these projections, which are perceived to be too optimistic (Lutz, et al., 2012, p. 829; Becken, 2008, p.695; Nell & Cooper, 2008, p.1104-1105). Regardless whether oil resources are diminishing or not, I claim that it is in any case inevitable to stop exploiting natural resources. Society as a whole has to alter its consumption pattern and start using scarce resources in a more conscious and responsible manner.

Peak oil

Peak oil is defined as the point where half of the available oil supplies have been consumed and production levels are unable to increase, as they have reached their maximum (Fantazzini, Höök & Angelantoni, 2011, p.7867; Leigh, 2011, p.165). As consequence of declining production levels, “peak oil would manifest itself as rapidly escalating oil prices followed by a global oil shortage” (Leigh, 2011, p.165; Lutz et al., 2012, p.831). Important to realize, tourism`s dependency on the availability of oil (Becken, 2008, p.695) makes it even more vulnerable to high oil prices than other industries (Becken & Lennox, 2011, p.133). Nonetheless, there might be market segments with higher price elasticity than others. Hence, the comprehension of those less vulnerable market segments and their role in tourism in the future is still far from comprehensive.

The time frame for peak oil is still very much contested. Most of the authors agree, however, a peak in crude oil production is most likely to occur before 2020 but not later than 2030 (Almeida & Silva, 2011, p.1275; Nygren, Akejkett & Höök, 2009, p.4006; Becken & Lennox, 2011, p.133). Authors are warning that yet there are “no adequate alternate resource and technology available to replace oil as the backbone resource of industrial society” (Friedrichs, 2010, p.4562). Furthermore, the tourism industry has shown only little consciousness about energy security and peak production of oil (Becken, 2008, p.695). Tourism professionals should be seriously concerned about the future of tourism. They should be eager to find sustainable solutions in order to be able to ensure the viability of its industry in a long- term future.

Tourism in the face of peak oil

The forecasts on tourism growth are overly optimistic. The UNWTO “estimates growth in the order of 3.8% for interregional and 5.4% for long-haul travel between 1995 and 2020”. It seems, however, these forecasts do not consider the challenge of oil availability (Becken, 2008, p.695) and potential effects of higher oil prices are ignored (Becken & Lennox, 2011, p.133). In fact, “reduced oil availability and increasing prices” will change human lifestyle around the globe and as a consequence it will alter the role of tourism within these (Becken, 2010, p.373 – 374; Leigh, 2011, p.165). Nonetheless, little is known about how society and tourism will change in the face of peak oil.

The negative effects of escalating oil prices for specific destinations and on tourism demand are far from clear (Becken & Lennox, 2011, p.134). In fact, increased oil prices will higher the price for airfares and tourism trips in particular (Yeoman et al. 2007, p.1355; Becken & Lennox, 2011, p.133; 139; Leigh, 2011, p.184). “The energy guzzling air travel” is expected to be greatly curtailed and “due to its high prices, only the elite will be able to afford air travel” by then (Leigh, 2011, p.180; 184). Moreover, “tourist’s decision making in relation to where to go, but also how they travel at the destination” will be affected by the high prices (Becken, 2008, p.697). Tourists might travel shorter distance and because using lower cost transport, such as train or bus which is more time consuming, they will stay longer at the destination (Yeoman et al. 2007, p.1355; Becken & Lennox, 2011, p.133; 139; Leigh, 2011, p.184). To be prepared for the future, destination mangers need to be aware of such trends in tourism demand in order to be proactive in their strategic respond.

The tourism demand is expected to diminish at the global level, whereby domestic tourism is assumed to compensate for reduced outbound international travel (Yeoman et al. 2007, p.1355; Becken & Lennox, 2011, p.133; 139; Leigh, 2011, p.184). For long distance destinations in particular, this means that careful analyses of future markets are warranted (Becken & Lennox, 2011, p.141). Countries, which dependent on tourism as well as remote destinations are perceived to be more threatened by the increasing oil prices than those relying on other portfolios (Becken & Lennox, 2011, p.140). It can be concluded that even though peak oil is a global phenomenon, the effects of limited oil availability may differ from destination to destination. To affirm this assumption more research is required.

Conclusion

It is truly surprising that even though “oil resources will be depleted at some point and a transition to non- follies fuel energy sources is inevitable”, there is only little discussion about the meaning attached for tourism (Becken, 2008, p.704). In fact, “the issues of energy consumption and its” long term future of tourism (Becken, 2008, p.695) is far from comprehensive.
The tourism industry should be concerned about the possibility of escalating oil prices, its effects on human lifestyles and the way in which this may change the role of tourism after all. Moreover “the relationship between oil consumption and economic growth is essential to an understanding of future trends in tourism demand” (Nell & Cooper, 2008, p.1096). It is crucial, furthermore, to comprehend a destination’s overall vulnerability to higher oil prices” and to recognize the “vulnerability of different market segments” (Becken & Lennox, 2011, p.140). If the tourism industry wants to succeed in the future, tourism manager must take peak oil serious. The understanding of the changes that will come with the peak in oil production is essential in order to alter and adjust the tourism industry accordingly. The successful respond to these new trends will determine the success of the destination.
To conclude, this paper has demonstrated the low consciousness of the tourism industry on the issue of oil scarcity and its impacts on tourism. However, it is still an understudied subject and a lot of uncertainties remain. Almeida & Silva claim that the lack of knowledge results in decisions, which are completely inappropriate in the face of diminishing oil resources. They see it therefore inevitable for decision makers at all levels to improve their knowledge on this issue (2011, p.1054), which also requires more research.

Literature list

Almeida, P. & Silva, P. (2011). Timing and future consequences of peak oil. Future. Vol. 43. (DOI: 10.1016/j.futures.2011.07.004). p.1044 – 1055.

Becken, S. (2008). Developing indicators for managing tourism in the face of peak oil. Tourist Management. Vol. 29. (DOI: 10.1016/j.tourman.2007.07.012). p.695 – 705

Becken, S. & Lennox, J. (2012). Implications of a long- term increase in oil price for tourism. Tourism Management. Vol. 33. (DIO: 10.1016/j.tourman.2011.02.012). p.133-142

Becken, S. (2008). Developing indicators for managing tourism in the face of peak oil. Tourism Management. Vol.29. (DOI: 10.1016/j.tourman.2007.07.012). p.695-705

Becken, S. (2011). A critical review of tourism and oil. Annals of Tourism Research. Vol.38. (DOI: 10.1016/j.annals.2010.10.005). p.359 – 379

Fatazzini, D. Höök, M. & Angelantoni, A. (2011). Global oil risk in the early 21st century. Energy Policy. Vol. 39. p. 7865- 7873

Friedrichs, J. (2010). Global energy crunch: How different parts of the world would react to peak oil scenarios. Energy Policy. Vol. 38. (DOI: 10.1016/j.enpol.2010.04.011 ). p.4562 –4569

Leigh, J. (2011). New tourism in a new society arises from “peak oil”. Tourismos: An International Multidisciplinary Journal Of Tourism. Vol.6. p.165 – 191

Lutz, C. Lehr, U. & Wiebe, K. (2012). Economic effects of peak oil. Energy Policy. Vol. 48. p.829 – 834

Matutinovic, I. (2011). Oil at 150$. The tipping point for changing course of civilization? Future. Vol. 43. (DOI: 10.1016/j.futures.2011.07.011). p.1129 – 1141

Nell, W. & Cooper, C. (2008). A critical review of IEA`s oil demand forecast for China. Energy Policy. Vol.36. (DOI: doi:10.1016/j.enpol.2007.11.025). p.1096 – 1106

Nygren, E. Aleklett, K. & Höök, M. (2009). Aviation fuel and future oil production scenarios. Energy Policy. Vol.37. (DOI: 10.1016/j.enpol.2009.04.048). p.4003 – 4010

Yeoman, I. Lennon, J. Blake, A. Galt, M. Greenwood, C. & Mc Mahon – Beattie. (2007). Oil depletion: What does this means for Scottish tourism. Tourism Management. Vol. 28. (DOI: 10.1016/j.tourman.2006.09.014). p.1354– 1365