More drivers this summer, but below 2007 peak as gas prices rise
Filed under: Economy
According to the American Automobile Association (AAA), 32.4 million Americans are planning to travel over the Memorial Day weekend. While this represents a 1.5 percent rise over last year's 31.9 million, it is far below the massive 35.3 million who traveled during the holiday weekend in 2007. It's not hard to see why numbers are down since 2007. Of the 32.4 million who are leaving town this weekend, 27 million will be traveling by car. Average gas prices are hovering around $2.36 per gallon, far below last year's $3.94 per gallon; however, even this comparatively low price represents an increase of about 30 cents over the past month. For many consumers, the rapid price increases of the past couple of years are still fresh memories, and it isn't hard to imagine the cost of fuel quickly accelerating upward as May turns to June and thoughts turn to the beach.
The fears may be somewhat alarmist. Although some experts are predicting that gas will go to as high as $2.80 per gallon, most are pegging it around $2.50. Refineries are running well below capacity, which means that, should demand increase, it will be possible to keep prices relatively low. This has not, however, put a damper on gas speculation, which many analysts are arguing will be the motivating force driving prices this summer.
More importantly, consumption habits have changed. A year ago, drivers were spending approximately $1.4 billion per day on gasoline; this year, they're spending roughly $874 million. Since 2007, a combination of high gas prices and rising unemployment have taught consumers a harsh lesson in cutting spending and maximizing efficiency. Many people who once flew away for the weekend are now driving, or even staying at home. Phrases like "stay-cation" and "local tourist" have entered the vernacular as consumers are trying to keep their families -- and their dollars -- closer to home.
This tendency toward thrift has caused major repercussions in the hospitality industry, where travel agencies, theme parks, and hotels are falling over themselves to offer bargains, discounts and compelling attractions that will draw consumers out of their homes. Domestic airfares are roughly 10 percent lower than they were last year, and the average price of a hotel room has dropped 14 percent. Although bookings are up slightly from last year, it's been a hard sell for companies that specialize in tourism.
The ultimate lesson seems to be one of supply and demand. Two years ago, when wallets were flush, employment was high and credit was flowing, consumers were happy to spend thousands of dollars on elaborate vacations. Now that the economic climate has changed, the "squawk level," or point at which consumers will balk, has dropped precipitously. Ultimately, consumers have learned that they have many options for their vacations this summer, including staying home, and it will be take a lot of work for the tourism industry to convince them to fork over their disposable income to chose the more expensive ones.
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Reader Comments (Page 1 of 6)
5-23-2009 @ 3:36PM
hemipwr54 said...
This story is a farce , written for the Commodity Market to justify the price increase just before a Holiday Weekend .
Should be titled "Fleecing of Americans Again" , or "Lame excuse for greedy SOBs SCAMMING Americans ."
Reply
5-23-2009 @ 5:21PM
tom Williams said...
Maybe where you live, but there's been little traffic slow down in most of the "red" states, where the libbers haven't taken over and totally trashed the economy.
5-24-2009 @ 8:15AM
jessie said...
I live in the DFW mewtroplex and I have not seen as many cars on the road as I have, as a matter of fact I have seen no traffic congestion
5-24-2009 @ 11:02AM
MICHAEL said...
EXCELLENT POST. I WAS GOING TO WRITE THE SAME THING BUT YOU WROTE WHAT I WAS THINKING FIRST.....GOOD JOB. WHO DO THOSE IDIOT ROBBERS THINK THEY ARE ANYWAY. THERE SHOULD BE NO GAS PRICE INCREASE AND THERE IS NO WAY HAT THERE IS THAT MANY CARS ON THE ROADS AND WHEN GAS REACHES 2.50 PLUS A GALLON FOR REGULAR THEN THE TOURIST INDUSTRY WHICH IS ALREADY DYING OUT FASTER AND FASTER BECAUSE OF GAS PRICES WILL BE GONE IN A COUPLE OF YEARS AND EVERYONE WILL JUST HAVE TO GO CAMPING OR SOMETHING. NOBAMA !!!! GROW A BRAIN FOR SOMETHING BESIDES SMOOTH TALKING AND MAKING PROMISES TO STEAL VOTES WITH LYING AND GET OFF YOUR SORRY ASS AND LETS GET TO DRILLING OIL HERE IN THE USA AND OPEN SOME OF THOSE CAPPED WELLS IN THE MIDWEST WE ALL ARE READING ABOUT !!!! YOU SUCK NOBAMA !!!!!
5-25-2009 @ 4:07AM
James said...
True...after all, they got their gas before the weekend...sooooo, how did they know to raise the price BEFORE people drove more?
5-25-2009 @ 12:50PM
Rhonda said...
I totally agree with you. With so many people unemployed and who have lost there homes ect. How can they even justify this article. How stupid do they think we are. How many people reading this article are going on vacation, driving? I know I'm not and everyone I know will not be driving anywhere. Except for maybe the food pantries.
5-25-2009 @ 6:10PM
Tom said...
My sentiments exactly. Big Oil runs everything it seems and that certainly includes the media. I did not drive over 5 miles since last Wednesday.
5-26-2009 @ 5:35PM
mickey said...
GO AHEAD, JACK THE PRICE OF GAS UP AGAIN AND SEE HOW QUICKLY WE STAY AT HOME AND WATCH A MOVIE. GO AHEAD, RAPIST OIL AND GAS PEOPLE. JACK IT UP CHICKEN SHI[S.
5-26-2009 @ 5:39PM
HELPLESS said...
CONSUMER CONFIDENCE AND SALES PLUMMET ON NEWS THAT BANKS THAT RECEIVED TARP FUNDS ARE SCREWING EVEN THEIR BEST CREDIT CARD CUSTOMERS.
5-23-2009 @ 3:36PM
Jimmy the Greek said...
Well Americans "Bend over here it comes again !" the Oil Bandildos are screwing America again, Naturally, since the summer season is upon us the Oil Bandildos are raising the price of fuel and the refineries have cut production. The bandildos has and will continue to use any excuse to raise the price of fuel. Obama should grow some "Balls" and start putting these Corporate Hoodlums behind bars !
Reply
5-23-2009 @ 5:21PM
tom Williams said...
Wait until Obambi gets his CAP and TRADE tax passed, you think you're bent over. You better grab your ankles. All of you whiners want to blame the oil companies and it's your government that's f**kin' you and Bush will look like Santa by the time this boy's finished.
5-25-2009 @ 10:16AM
Athina said...
You are so right , but arent you Greek ? if you are you see life for how it really is ! Have a great day
5-23-2009 @ 3:50PM
John Hoover said...
The easy to reach oil was pumped, refined and burned decades ago. What is left is in small scattered pockets, very deep water, very remote areas and trapped in geologic matrix that defy extraction. It is never going to be cheap again. That does not mean that it will not spike then fall whenever commodities investers think they can make a buck or two. The smart money is going into renewables. Because all fossil fuels are finite they are going to continue to rise in price as the reserves are depleted. Do noty pay attention to those who say that renewables are too expensive. Chances are their bread is buttered on the side of the status quo.
Reply
5-24-2009 @ 8:44AM
Gunwriter said...
There is still PLENTY of oil in the US--easy to retrieve with today's technology-- but unreachable because of whining, green, fern-fairies and tree-huggers, trying to cram their California-like-utopia fantasy up our asses.
5-24-2009 @ 9:45PM
Geordi said...
Excellent post: bang on the dot.
5-23-2009 @ 4:28PM
obi said...
It doesn't matter, Bush/Cheney, Obama/Biden, it's all the same BS. Good cop, bad cop crap. Until we get a solid third choice we can only expect more of the same, those that have and those who soon won't.
Reply
5-23-2009 @ 4:44PM
bailoutsos said...
My wife and her sister would have had a nice trip in July, except Alaska Airlines and American Airlines screwed us on the "free miles" scam. Use a credit card that gives you cash back or points that you can use for anything.
Reply
5-23-2009 @ 4:58PM
Bonnie said...
Not going to increase my driving this year. Found lots of things to do not far from home including parks with bike paths....and free concerts.
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5-23-2009 @ 5:20PM
Mike said...
Either the economy is picking up, or the rich have stated to spend again. I was out and about on I 270 in Missouri yesterday. I counted 3 5th wheel trailers pulled by large diesel powered trucks, six $100,000+ motor homes (all towing vehicles) and one $1Mil+ Prevost Class A conversion. It takes money for fuel to operate all of these vehicles, as mileage is below 15 miles per gallon.
Reply
5-24-2009 @ 8:25AM
jessie said...
wooooow 3 whole trucks, well that just tripled the oil use for the memorial day weekend