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But tourism officials upbeat

Gas prices hit record territory

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RAPID CITY - Mid-May is probably a bit early to be setting summer gas price records. Summer hasn't even begun.

But on Monday, the price of regular at most Rapid City stations bumped up another 10 cents to $3.219 per gallon - the highest price in city history. Ethanol-blend fuel was 2 cents less at many stations.

Today's price beats the previous Rapid City record, $3.159 per gallon, set during an eight-day period in August 2006, according to Journal records.

Which begs the question: If we are already higher than last year's Sturgis motorcycle rally week - usually the gas price high-water mark - what will we be paying during the 2007 Sturgis rally?

Maybe not so much, said Mark Madeja, spokesman for AAA South Dakota. He believes we may be seeing an early peak in prices, rather than the start of a much larger run-up.

"The good news is that this is not necessarily an indication that it's going to be this way all summer long," he said. "We are still of the mindset that we are seeing the spike early on in the season."

He said crude-oil supplies are strong, but a series of refinery fires, breakdowns and maintenance problems have disrupted the industry's ability to build up gasoline stockpiles for the summer driving season. "We have the oil; we just need to get it refined," he said.

AAA and other industry watchers believe that those refinery problems will be eased somewhat as we head into the summer. Prices should stop rising, and maybe even back off a bit. At least, that's the theory, Madeja said. But in 2007, theories about gas prices don't seem to hold up, he said.

"This year is off-the-charts crazy," Madeja said. "During Katrina (the hurricane that shredded the Gulf Coast in the fall of 2005), we talked about being in uncharted territory, but that was based on a very specific event. But now, we really are in uncharted waters, in the truest sense of the phrase."

Are South Dakota's 87,000 AAA members losing interest in automobile travel because of the high prices? "They seem to have a higher level of concern, but they're not actually pulling the plug on travel," he said.

For one thing, he said, drivers have now had a few years to get used to paying about $3 per gallon. That's certainly true in Rapid City. Recent peak prices have been $2.999 in May 2004, $3.059 in September 2005 (Hurricane Katrina) and $3.159 in August 2006.

And tourism officials point out that a 37-cent increase in gas prices - the Rapid City price was $2.849 in May 2006 - would add less than $30 to the cost of a 1,500-mile road trip (assuming your car gets 23 mpg).

Madeja said people probably won't cancel a trip over $30. They might cut other costs, stay in cheaper motels or pack lunches instead of eating in restaurants. But they are apparently not giving up their mobility.

Billie Jo Waara, director of the South Dakota Office of Tourism, agrees. She said early indications are that the state's tourism industry will have a good year. "We're very excited about this year. Reservations are up, calls are up, visitors are up," she said.

She said there is always concern about what gas prices will do to tourism. This year, the state agency is using the current run-up to persuade people in South Dakota and neighboring states to explore towns, events and attractions closer to home.

"There's a lot to do in the Black Hills as well as the rest of the state," she said. "And we think this is a great time - especially if budgets are stretched a little bit - to explore the things in their own backyard."

South Dakota and 19 other states have reached record-high gas prices, according to AAA. The state's average on Monday was $3.213, the auto club reported.

In Sioux Falls, where gas is usually cheaper, prices are 3 cents per gallon higher than in the Black Hills. AAA reported that the Sioux Falls average price for regular gas was $3.249 on Monday.

And not all Rapid City stations were charging the same price this week. In fact, the Concord station on West Main Street actually lowered its price 2 cents Tuesday. With regular gasoline at $3.009 per gallon, business was brisk.

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com

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