We'll be driving less this holiday weekend -- here's what that will mean
Filed under: Economy
Over the past few years, the Fourth of July has evolved into a significant measure of the nation's economic mood. Most children are out of school, and most parents have the day off, so millions hit the highway for short vacations that reveal changes in consumer optimism, disposable income, and the effects of gas prices.
Seasonal gas hikes are a summer tradition: as demand surges, prices shoot up, generally peaking between June and September. While inconvenient, the hikes usually aren't too significant. In most years, drivers simply dig a little deeper into their pockets to pay the few extra cents per gallon.
In 2008, however, the game changed. When U.S. gas prices broke the $4-per-gallon threshold, many drivers began to curtail their driving. The effect was dramatic: last July 4, only 37.8 million people drove or flew more than 50 miles from home -- a 10.5 percent drop from the previous year. (The International Energy Agency released its Medium Term Oil Market Report on Monday, June 29, forecasting oil demand through 2014 as increasing 0.6 percent annually, or 540,000 barrels per day -- far lower than its previous calculation of 1.1 percent, or a million barrels a day.)
In many ways, the July 4 drop-off was a miner's canary: the effects of higher gas prices rolled through the economy, leaving few parts of American life untouched. Like a Rube Goldberg contraption, the cost of gas drove up the price of food and air travel, which curbed discretionary spending, which hurt businesses that rely on impulse purchases, which exacerbated unemployment, which helped push a teetering financial system to the brink of collapse.
What a diference a year makes. On Independence Day this week, 37.1 million travelers will drive or fly more than 50 miles from home, according to AAA predictions: a 1.9 percent drop from last year, which is a significant improvement over last year's tumble. And with the price of air travel falling precipitously, AAA anticipates a 4.9 percent increase in leisure-flight bookings this year. Car-rental rates are also expected to rise by about 5 percent.
That's actually very good news. Gas prices this summer aren't expected to reach 2008 numbers, but many experts anticipate a $3-per-gallon tag this year -- an increase from May, when the dominant wisdom was that prices would top out at $2.50 per gallon.
On average, each family taking a trip on the Fourth will spend $1,160. Given that unemployment has risen for the past 13 months, now swollen to a massive 9.4 percent, it's amazing that so many families are planning Indepndence Day getaways. The American wallet is far more tattered than it was a year ago, when unemployment hovered at around 5.6 percent nationally. But this summer's combination of lower gas prices, lower ticket prices, and an optimistic outlook could produce a nice little windfall for the travel industry -- and the economy.
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Reader Comments (Page 1 of 2)
6-29-2009 @ 7:10PM
bailoutsos said...
Fewer drivers and what it will mean? Higher gas prices for those that have to drive. The oil companies will need to make up the lost profit on those that do not have to drive from those that have to.
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6-29-2009 @ 9:19PM
Patriot Games said...
AUDIT the FED!!!!
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6-30-2009 @ 4:10AM
sam1 said...
Don't know where you folks are but our gas is 3.05 per gallon now and it keeps going up.Let'ask President Obama about a change for us that do have to travel to jobs.
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6-30-2009 @ 11:26AM
duey35 said...
Dont you know sam Obama doesn't want any of us to work we are aall suppose to go and relaxe on the beach! Ask any democrat
6-30-2009 @ 5:21AM
jon said...
USA slipping into THIRD WORLD COUNTRY status thanks to 8 years of REPUBLICAN control and CRIMINALS BUSH CHENEY RUMSFELD OIL INC.
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6-30-2009 @ 3:32PM
michelle said...
IT'S NOT ALL BUSH'S FAULT. MOST OF IT IS NOW OBAMA'S FAULT. QUESTION, WE STILL AREN'T SURE IF OBAMA WAS BORN HERE IN THE U.S.A.
6-30-2009 @ 5:36AM
MyKisa said...
...audit the fed
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6-30-2009 @ 5:48AM
CommanderBill said...
Fewer idiots that write these silly articles is what is needed.
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6-30-2009 @ 5:54AM
CommanderBill said...
jon said...
USA slipping into THIRD WORLD COUNTRY status thanks to 8 years of REPUBLICAN control and CRIMINALS BUSH CHENEY RUMSFELD OIL INC.
===========================================
Before running off at the mouth you ought to do some research. The decline of America can be directly attributed to Democratic policy. In particular to low income housing / CRA policy, restrictive energy policy and more recently Obama incredibly poor deficit spending in non productive areas of the economy. It is fair to say if Democrats want to do it doing the opposite is probably what is best for the economy.
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6-30-2009 @ 6:37AM
Betty said...
We aren't going anywhere this coming weekend. Definately won't be spending $1000 on anything.
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6-30-2009 @ 8:42AM
Don said...
The "Jons" of the world really don't get it. You know they are Dems because they are still blaming Bush for everything. Bush screwed up but Obama is setting a new standard for screwing up, lying about it, and blaming Bush for his having to triple the national debt!
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6-30-2009 @ 9:08AM
D said...
I would like to know when and where these polls are conducted. Where did they come up with the $ 1160.00. Who the h-ll has $ 1160.00 to spend?
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6-30-2009 @ 9:13AM
NORMAN said...
WILL STAY HOME AND COOK OUT.HAVE THE FAMILY OVER AND LATER DRIVE MY 1950 WILLIS JEEP TO MY CIVIL WAR ERA CABIN ON MY MOUNTAIN PROPERTY IN EAST TENNESSEE.
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6-30-2009 @ 9:17AM
james george said...
We are the laughing stock of OPEC,,they have so much oil they dont know what do with it all. Ive seen it with my very eyes,,,lots of tankers sitting outside of port waiting to unload,,because they have no place to put it all. You tell me ,,,WHATS THE DEAL?
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6-30-2009 @ 9:21AM
american-t said...
If only we had an Honorable President like President Bush back in office.
Americans will regret electing a Socialist (Obama), who is concerned with taking personal freedoms and choice away from all those who are not in his liberal club.
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6-30-2009 @ 9:40AM
mark said...
The sheep are all in line to believe anything that is put into these articles...
Make sure you accept this BS cause thats all your going to here from now on.
The system is screwed and the cheers everyday out of Washington are getting louder.
THE BOYZ and Girl in Congress couldn't care less what we think!!!!!
Madoff is a Virgin compared to what is really going on.....
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6-30-2009 @ 4:25PM
jerry said...
are they fools the only ones that should have any money to spend are the chinese they make everything we have to buy and they wonder why we dont have jobs come on boys wake up!
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7-06-2009 @ 11:15AM
Rozanne Weissman said...
On holiday or vacation road trips referred to at the opening of the story: Gas prices are higher during the heavier summer driving season. After the roller coaster 2008 gas prices which kept so many people close to home, thoughts still turn to road trips as an escape from current economic and other realities. There are smart ways for your readers to gain more control of their gasoline expenses with money-saving road trip tips from the Alliance to Save Energy's Drive $marter Challenge campaign that can save money on gasoline from the trip planning stage to conclusion --http://nonflash.drivesmarterchallenge.org/media.php?id=june09.
And the Drive $marter Challenge website can save readers hundreds of dollars on gasoline annually -- www.drivesmarterchallenge.org. -- Rozanne Weissman, Alliance to Save Energy
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7-01-2009 @ 7:06AM
dave said...
well, it was bush"s falt when gas went up. it went down again under him. now its back up. WHY IS NO ONE NOW BLAMING OBAMA?
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7-01-2009 @ 2:30PM
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