FocusUS 4th of July travel to rise in 2010, sparking gasoline demand

02 July 2010 19:45  [Source: ICIS news]

US travellers to riseBy Sheena Martin

HOUSTON (ICIS news)--US gasoline demand could be jump-started by an expected 17.1% increase in US travel during the upcoming 4th of July holiday weekend, sources said on Friday.

About 34.9m Americans were expected to go at least 50 miles from home, compared with the 29.8m who travelled in the 2009 holiday weekend, according to the American Automobile Association (AAA).

“While financial markets continue to have volatility related to the European debt crisis, the landscape of the US economy is in a much different place than it was one year ago,” said Glen MacDonell, director of AAA Travel Services.

Gasoline demand during the holiday weekend would be a key indicator in gauging the state of the US economy, according to the Schork Report, an online newsletter covering the energy and shipping markets.

The weak US consumer confidence level reported on 29 June suggested that Americans would conserve gasoline during the holiday weekend, sources said.

On the other hand, low prices could encourage spending, said author Stephen Schork. That sentiment was echoed by other analysts.

“Gasoline demand should be higher than for the last week since some people do have either Friday or Monday, or both off from work and the ‘official’ start of summer for folks way up north is around now,” said Anne Keller, president of Midstream Energy Group.

At the start of the US summer driving season in late May, the US Energy Information Administration (EIA) did not predict significant year-over-year increases in motor gasoline demand during the summer because of the robust gasoline supplies. In the week ended 25 June, the EIA reported gasoline stocks up 6.5m bbl compared with the same week a year earlier.

For the US summer as a whole, the EIA forecast an increase of just 0.9% in gasoline consumption.

The 17% improvement for the upcoming weekend, however, would be a much greater increase in travel than the 5.4% projected by AAA for the Memorial Day holiday weekend in late May.

“Demand actually trended lower before and through mid-May and the rise into Memorial Day was moderate,” said Stephen Jones, analyst with consulting agency Purvin & Gurtz. “There was decent growth for the week after Memorial Day as summer driving was just getting underway.

"Demand has risen fairly well since Memorial Day," he added.

The US national retail gasoline average, however, was at $2.75/gal (€2.20/gal) on Friday - nearly identical to week- and month-earlier figures, according to AAA.

Travel by automobile continued to be the dominant mode of transportation for holiday travellers, AAA said, with the organisation expecting more emergency roadside assistance calls this weekend than for any other summer holiday.

“With the poor economic sentiment, folks have curtailed spending, including travel, yet there’s a thread of thinking that some folks have resorted to driving rather than flying,” said Jones.

AAA travel agents also reported double-digit increases in the percentage of travelers making advanced reservations for cruises, vacation packages and online hotel bookings.

“(These) are positive signs pointing to an increase in the number of Americans traveling this Fourth of July,” MacDonell said.

($1 = €0.80)

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