* Dauphin Island merchants say cancellations running high
* Slowdown comes as travel season should be heating up
* Day-trippers, curiosity seekers dominate island commerce
By Steve Gorman
DAUPHIN ISLAND, Ala., May 10 Long before tar balls washed up on its sugar-white sandy beaches, the tiny barrier island at the mouth of Mobile Bay saw its main source of commerce -- tourism -- take a beating from oil gushing into the Gulf of Mexico.
Dauphin Island is steeped in history and known for its pristine beaches, sport fishing and abundant bird life but merchants there say vacation traffic to the scenic resort has slowed to a trickle as an environmental disaster looms off the Gulf Coast.
The slowdown comes just as the tourist season should be heating up, catching some business owners, like souvenir proprietor Lynn Wickman, with full inventories bought on credit in anticipation of a busy spring and summer.
Instead of families on vacation, the bulk of the island's commerce now consists of curiosity seekers and locals who generally spend less time, and less money, in the town.
"It sucks," said Wickman, owner of the Treasure Trove gift shop that occupies an 18th-century church -- one of Alabama's oldest buildings -- at the end of a quiet Mother's Day. "We should have had a very busy day today and we have not."
She estimates her business has dropped by half since news of the April 20 explosion that destroyed an oil rig under contract with BP, killing 11 crewmen and unleashing an undersea gusher that threatens to become the worst U.S. oil spill ever.
Making matters worse, Dauphin Island was just starting to rebound from Hurricane Katrina, which demolished some 200 homes, said Wickman, a resident of the area for more than 20 years.
Gary Bratt of Chaise N' Rays Rentals, specializing in beach chairs, umbrellas and motor scooters, said his business was off by 70 percent. Hand-lettered signs posted in front of his shop offer potential customers an "Oil Spill Special" discount for scooter rentals.
"You've got to do something. Sales are down so bad," he said. "If you talk to any of the realtors and rental management companies, they're getting cancellations right and left.
"Every reservation we've had in the last two weeks has been canceled."
BIRDS AND TORPEDOES
About 1,300 people live year-round on the narrow 14-mile- (23-km) long island, which touts itself as "America's Birdiest Coastal Town" and his home Fort Gaines, site of the U.S. Civil War naval battle of Mobile Bay where U.S. Admiral David Farragut is said to have famously declared, "Damn the torpedoes, full speed ahead!"
On Saturday, globs of tar washed up from the Gulf onto the main public beach of Dauphin Island's east end, alarming some beachgoers, stirring media excitement and prompting the dispatch of a cleanup and assessment team.
Samples of the tar, the first seen in a populated area since the Deepwater Horizon explosion, were collected for analysis to determine if they came from the oil spill.
The beach was clean and tar free on Sunday as sunbathers and swimmers abounded, seemingly undaunted by clusters of oil-absorbing synthetics, or pom-poms, left along the water's edge the previous day.
Jason Sullivan, 30, of Mobile said he and his family came for the day partly out of curiosity about the tar.
"We were just going to come anyway and see what it was all about," he said. "But there's a lot of people here and it's clean and a beautiful day."
Regular U.S. Coast Guard patrols of the area since the spill have found no sign of oil, Petty Officer Joel Huffman said on Sunday, after one excursion to the island's east end.
But he and other locals said the appearance of the tar balls on the barrier island beach was unusual and not something they had seen before in that area.
Wickman blamed intense media coverage of the spill for contributing to the island's current economic woes.
"I believe it's probably the media's overreaction to what is a potential disaster," she said. "I've seen this every time there's been a hurricane in the Gulf."
Bratt said he understood consumers' reluctance to spend hard-earned dollars and precious vacation time on a Gulf Coast destination at the moment.
"You wait all year for your vacation -- you don't want to spend it in what you perceive is going to be a cesspool." (Editing by Peter Cooney)