US Labor Day travel to increase on lower gasoline

30 August 2013 22:22 Source:ICIS News

US Labor Day travel to increase on lower gasoline By Anna Matherne

HOUSTON (ICIS)--The number of Americans travelling 50 miles (80 km) or more from home during the upcoming US Labor Day holiday may hit a post-recession high, as a recent drop in gasoline prices could encourage more people to travel, an analyst said on Friday.

Automobile agency AAA said it projects 34.1m Americans will journey 50 miles or more from home during the upcoming Labor Day holiday, about a 4.3% increase from the 32.7m people who travelled in 2012.

Recent positive economic indicators helped boost holiday travel expectations.

“AAA is forecasting a lift in Labor Day travel this year due to the increasingly positive economic outlook and optimism in the housing market,” said AAA president and CEO Robert Darbelnet. “For many Americans, their home is also their biggest asset. As home prices improve in many parts of the country, more families are feeling comfortable about traveling this Labor Day holiday.”

The 2013 Labor Day holiday travel period is defined as Thursday 29 August to Monday 2 September.

Within AAA’s prediction, journeying by automobile will make up the largest part, accounting for approximately 29.2m travellers, an increase of 4.3% from the 28m who drove last year.

One factor contributing to the higher auto travel this year is lower gasoline prices for consumers.

Year on year, US gasoline prices have fallen for this holiday weekend.

Current prices are at $3.59/gal for regular unleaded retail gasoline, while the same gallon was at $3.83/gal in 2012, the most expensive average on record for the holiday.

A key part of the recent decrease in the overall US average regular gasoline retail prices has been lower prices on the west coast.

According to the US Energy Information Administration (EIA), on 26 August the west coast average retail price for regular grade gasoline was $3.75/gal, 21 cents/gal lower than the $3.95/gal average on 22 July.

Despite forecasts for the best Labor Day travel since the recession, one analyst said it is still far off from what have could been with normal economic growth each year.

“I think the drop in gasoline prices will cause more people to travel,” said Phil Flynn, senior market analyst at the PRICE Futures Group. “I think people are not feeling great about the economy but not bad enough to hunker down at home for the weekend. Prices are lower year on year, and now people are more accustomed to high prices in general. Some have adjusted to the realities of it.”

Another factor that plays into weekend travel plans is the weather, and without the threat of a hurricane this weekend, good weather will likely boost holiday travel.

“The weather will be perfect for an end-of-summer bash,” said Flynn. “Next week we may have hurricanes, but that’s a concern for next week. This week things are pretty perfect for the last week of summer.”

And the drop in gasoline prices won’t just be a welcome relief for Labor Day travellers, but it should extend through the end of the year as refiners switch to a cheaper-to-produce grade of gasoline.

AAA forecasts gas prices to remain less expensive than last year based on current trends through the middle of August, but there remains the potential for late-summer hurricanes and refinery problems that could send prices higher.

According to fuel analysts at, most of the gasoline price declines through the remainder of 2013 will be attributable to relaxed gasoline specifications that make it easier to manufacture motor fuel after 15 September.

“GasBuddy analysts predict that retail gasoline prices are likely to slip lower in the last four months of 2013, which in combination with stable incomes should decrease the amount of time necessary to purchase a gallon of fuel for the Thanksgiving and Christmas holidays,” said the company’s Senior Petroleum Analyst Patrick DeHaan.

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By Anna Matherne