Johnny Ch Lok

New and Old Economic Theories Explain Whether Oil Price Is Main Factor Johnny Ch Lok

?Can economic theory explain old price change to influence tourism income?I shall attempt to apply old and new economic theory to explain whether oil changing price has direct relationship to influence global tourism indusry development or tourism income as below: Is oil changing price the main to influence tourism income or tourism development or economic growth ? If oil price rises ar falls, it will or won't cause tourism income decreases or increases? If they have cause and effect relationship, what are the main factors to influence tourism income changes by oil price rises or falls ? I aim to investigate how any why among oil price shocks will influence tourism income variables. We may distinguish between these oil price shocks: Supply-side, aggregate demand and oil specific demand shocks. I assume that oil specific demand shocks affect inflation and the tourism sector equity index. By constrast, I also believe that aggregate demand oil price shock exercisr an effect, either directly and indirectly tourism generated income and economic growth. So, in old economic theory, supply-side, aggregate demand view to oil specific demand shocks will influence tourism income varies. So, governments ought implement strategies against future oil price movements or plan for economic policy development. In fact, instead of oil price changes will influence tourism income, it could also harm economic growth and tourism activities, due to the effect they expert on transporation, production cost, economic uncertainty. Because tourism activities is one important sector to influence any country's leisure consumption GDP income source. So, sudden fluctations in oil prices may also influence economic growth. It is based a hyphthesis known as the tourism led economic growth. So, it seems that they have direct or indirect relationship to case effect between oil price and tourism activities and development. So, increase on tourism income, the called " economic-driven tourism growth". In addition, high oil prices are affecting certain tourism industry segments, e.g. airlines, cruises lines, hotel, rent travelling car services etc. for oil, importing countries example, with reference to macro economic effects, higher oil prices generally lead to higher inflation, when they negatively influence to country's income. Hence, from a micro-economic perspective, positive oil price shocks lead to a decline in disposable income. for low income people, it will bring an immediate and negative impact on tourism, mainly due to they feel tourism leisure is regarded as a luxury good, when oil price shocks to rise suddenly . It influences any airline or cruise entertainment service providers' costs are influenced to raise. Then, they need to increase air ticket or cruise ticket price. It will bring on negative tourism leisure demands-side the oil price increases low income group, potential tourism leisure consumers. Hence, it seems that oil price may have indirect relationship to influence tourism leisure consumers' needs. ?How the price of oil changes influences global tourism industry growth or recession?In macro-economic view, sudden mid and long term oil price shock can influence global torusim industry growth or recession. For example, a oil price of US$180 per barrel was considered only a few years ago, now this has a realistic scenario to which all plaers in the T& T sector have to adapt. At such a high level, the price of oil will become even more critical to almost every part of the tourism value chain. Although, weak global demand, caused by global economic recesson, resulted in a steep oil price decline to US$45 per barrel by the fourth quarter of 2008 in the past low oil price occurrence history, this won't change the mid to long -term oil forecast.