THE FIRST THING HOTELIERS SHOULD DO in the wake of BP’s shutdown of its oil field in Prudhoe Bay, Alaska, is to not panic. Since Alaska’s pipeline corrosion was discovered, BP has determined that it may need to close only half of the field during the correction process.
Certainly, deleting 400,000 or even 200,000 barrels of oil a day from the market will affect the price of the other energy sources oil competes with—including natural gas—especially as demand for alternative energy sources increases.
Indeed, the likely outcome is that industries that use either oil or natural gas will switch to the less expensive commodity, if the oil shortage is longer or more extensive than predicted. And, as the laws of supply and demand dictate, the price of the less expensive commodity will rise.
The good news is most experts expect Prudhoe Bay to be out of commission for only one to six months. That means the shutdown won’t affect hoteliers whose energy contracts are locked in until at least early next year. Further, hoteliers located in the regulated states may not see any increase until it is passed through via a fuel adjustment clause or PGA (Purchased Gas Adjustment)…
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