AAA projects 29.2 million Americans will hit the road for the last three-day weekend and unofficial end of summer, up 4.3 percent from last year. In advance of the Labor Day holiday weekend, drivers across the country have noticed a recent uptick in prices at the pump. While gas prices remain below where they were last year (in most states), prices have reversed their recent downward course as a result of higher crude oil prices. The national average price for regular unleaded gasoline was $3.59 per gallon Friday, up five cents from a week ago, yet four cents less than a month ago and 24 cents less than a year ago.
While retail gas prices remain well below year-ago levels, tensions, unrest and violence in the Middle East and North Africa have kept global oil prices higher than recent summers. Crude oil has soared to two-year highs this week on growing fears that the Middle East oil supplies could be disrupted if the U.S. launches military strikes at Syria. Crude oil surged to over $110 per barrel this week, a 28-month high not seen since the Arab Spring of 2011, with the spike mostly coinciding with word that the Syrian government staged chemical weapons attacks on civilians. This, along with ongoing debate over how the Western allies will react, has investors on edge about the stability of crude supply and logistics in the oil-heavy Middle East.
In its weekly report, the Energy Information Administration (EIA) data showed crude oil stocks rose by 3 million barrels to 362.0 million barrels, a comfortable level. Gasoline inventories dropped 600,000 barrels to 217.8 million barrels, well above where it was last year and versus the five-year average. Gasoline demand shed 169,000 barrels per day (bpd) to just over 9 million bpd, a figure that may perk higher over the upcoming Labor Day weekend, but will almost certainly ease back to levels beginning with the number eight in the following weeks.
“The unofficial end of summer is here and despite gas prices taking an upward tick this week, most people will keep their travel plans for the Labor Day weekend,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Most travel plans are confirmed and pre-paid well in advance, therefore recent gas price increases won’t likely impact Labor Day weekend travel. However, beyond the holiday weekend, motorists will have to wait and see how geopolitical tensions in the Middle East will affect crude oil prices and for how long. When crude oil rises, gas prices typically follow suit since a gallon of gasoline contains 70 percent crude oil. “
AAA Travel projects 34.1 million Americans will journey 50 miles or more from home during the upcoming Labor Day holiday, a 4.2 percent increase from the 32.7 million people who traveled last year. Eighty-five percent of travelers (29.2 million) are expected to travel by automobile, an increase of 4.3 percent from 28 million last year. Beyond the holiday weekend, motorists are expected to return to regular driving routines – back to work and back to school – which will likely reduce gasoline demand. In addition, motorists and analysts alike will continue to watch the situation in the Middle East and North Africa. If tensions continue to escalate, compromising crude oil distribution, oil prices could continue to escalate, if even for the short term, causing gas prices to do the same.
Share
Contributors
