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    Economy Woes, Gas Prices Dampen July 4 Travel

    But crude oil prices drop as global demand sags.

    ORLANDO -- AAA projected the number of Americans traveling on vacation this Fourth of July holiday weekend will decrease 1.9 percent from 2008, with approximately 37.1 million travelers taking a trip of 50 or more miles away from home.

    Last year, 37.8 million Americans traveled during the same period—a 10.5-percent decline from the 42.3 million travelers who vacationed in 2007. The July 4 holiday is typically the busiest time of year for auto travel since nearly all school-aged children are out of school at this time and, as a result, parents are more apt to take family vacations.

    AAA said the projected slight decline in leisure travel is mainly due to ongoing uncertainty about the strength of the economy, especially rising joblessness and sagging personal incomes. The recent rise in gasoline prices may also be causing some travelers to limit or abbreviate their holiday plans, although its impact on overall vacation costs remains minimal, AAA said.

    "Many Americans remain cautious about the outlook for their personal finances and these attitudes are reflected in the slight decline in travel we are forecasting for the upcoming holiday weekend," said Robert L. Darbelnet, AAA president and CEO.

    Although fuel prices remain much lower than they were one year ago, the relatively steep price increase since May will dampen consumer enthusiasm for road trips, AAA predicted. The association projected a 2.6-percent decline in auto trips from 33.4 million last year to 32.6 million in 2009. More attractive airfares also will contribute to the decline in auto travel.

    Fourth of July travelers will log an average of 614 miles roundtrip this upcoming holiday weekend. Over one-third of travelers will stay relatively close to home, with expected round trips under 250 miles. One-third of weekend travelers will log between 250 and 700 miles, and 28 percent will travel more than 700 miles round trip.

    Regional holiday trip forecasts are strongly influenced by the economic conditions that exist in each market. Relative strength in the mountain region lead AAA to expect higher-than-average Independence Day weekend travel. It will be the opposite for the New England and East South Central regions.

    Gas prices are expected to respond to falling oil prices, which fell under $69 a barrel yesterday as Japanese exports dropped and U.S. gasoline inventories rose, according to a Bloomberg News report.

    Gasoline supplies increased 3.7 million barrels last week, according to the American Petroleum Institute. Gasoline prices for July delivery dropped as much as 3.67 cents, or 1.9 percent, to $1.85 a gallon.

    "Unless we start to see sequential GDP growth, it’s going to very hard to sustain these high prices," Francisco Blanch, head of global commodity research at Banc of America Securities-Merrill Lynch, told Bloomberg News. "We’ve run out way too far. Seventy-dollars a barrel is a mid-cycle price. It's not a price we should have at a time when the recovery isn't yet being seen through."

    Related news:

    EIA Raises Price Forecast for Gasoline, Crude Oil

    BP: Oil Demand in U.S. Gas Market Peaked

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