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    Lower Gas Prices Expected to Fuel More Memorial Day Travel

    AAA says U.S. travel will rise about 1.5 percent this weekend due to lower pump prices, but analysts warn of higher prices ahead.

    NEW YORK -- U.S. travel during the Memorial Day holiday this weekend will rise about 1.5 percent from last year as lower pump prices encourage vacationers, AAA said.

    The number of people traveling at least 50 miles from home will rise to 32.4 million from 31.9 million a year ago, according to AAA, the nation’s largest motorist organization. Last year, traveling declined by a 9.6 percent drop from the previous year, as gas prices were on their way up to record-high levels.
    Nearly 11 percent of the total U.S. population is set to travel this weekend, said the AAA.

    "Last year, soaring gas prices and a deteriorating economy resulted in far fewer trips being taken than had been forecast," Robert Darbelnet, CEO of Heathrow, Fla.-based AAA, said at a news conference in New York. "It is a slight uptick. In this economy, any uptick over last year is a positive sign."

    Average prices for regular gasoline rose 2.2 cents to $2.248 a gallon, the highest since Nov. 9, AAA said yesterday on its Web site. Motorists paid 40 percent less at the pump, from $3.718 a year earlier.

    "We don’t think it’s peaked. We think it will probably not go over $2.50 a gallon" averaged nationwide, said Darbelnet.
    About 27 million people, or nearly 83 percent of all travelers, are planning a road trip during the Memorial Day holiday. That’s approximately a 2.5 percent increase from 26.3 million last year.

    This increase in the number of travelers may not translate into a rise in gasoline demand, though. "We see demand as being slightly less in this economy than last summer," said Darbelnet.

    Gas prices have already begun inching upwards. A report in the San Diego Union-Tribune noted that some analysts predict prices could surge above $2.50 per gallon nationwide by July 4. Gasoline prices usually rise in springtime as refineries shift from "winter blend" gasoline to a more refined "summer blend." The change in blends typically results in a price rise of 10 percent to 15 percent.

    "The fact that oil is over $50 per barrel, much less close to $60, doesn't make sense in a pure supply and demand market," said Judy Dugan, who tracks oil prices at Consumer Watchdog, a public interest group in Santa Monica.

    "It's scary to think that if gasoline can go up this much in a completely collapsed market like this, when businesses are shutting down and people are being thrown out of jobs and economizing in every way, how much will it go up when the economy recovers? $4? $4.50?" Dugan said told the Union-Tribune.

    According to the report, refineries on the West Coast are now running at about 80 percent of capacity, down from a five-year average of more than 90 percent. Tesoro Corp., which runs seven refineries across the nation, cut production 10 percent in the first quarter and last week announced it would lower its production even more.

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