Posts Tagged ‘Gas Prices Higher’

Executive from one of the nation’s largest leisure travel organizations discusses the potential impact of rising gas prices on American travelers 

WASHINGTON, DC, (March 27, 2012) – AAA Executive Vice President, Association and Club Services, Mark Brown testified before the U.S. House Committee on Natural Resources today regarding the impact of gas prices on the U.S. travel industry. Brown provided Committee members with a consumer prospective on the impact of fuel prices on household budgets and travel plans.

“Once again America’s motorists are caught in a squeeze and confused as they try to understand what is happening at the gas pump,” said Brown. 

Since the beginning of 2012, the national average price of self-serve regular unleaded gasoline has jumped from $3.28 per gallon to $3.90 per gallon, an increase of 62 cents per gallon.  At this price, a typical family owning two vehicles and using 1,200 gallons of gasoline per year spends about $4,680 annually, or about $390 per month.

Brown cited the findings of a recent AAA survey in which 84 percent of respondents said they have already changed their driving habits or lifestyle in some way because of increased gas prices. Combining trips and errands was the most commonly reported cost-cutting tactic, with 60 percent of respondents reporting having already made this adjustment. Forty-five percent of respondents are dining out less and 34 percent are delaying major purchases.

With more than 1000 branch offices across the country and over 7,000 travel counselors, AAA has a finger on the pulse of the American traveler. Although rising gas prices can cause concern for the travel industry, Brown indicated that current feedback from AAA travel counselors is encouraging. “A quick poll of some of our agents suggests that members are not cancelling their vacation driving plans, but may alter the distance and number of destinations.”

AAA agents have noticed that consumers interested in purchasing individual airline tickets only are watching fares closely and waiting to book flights anticipating that fares may come down.

As the summer travel season approaches, Brown pointed out that it is still too early to determine the impact of higher gas prices on summer travelers. AAA produces five holiday travel forecasts each year with research partner IHS Global Insight. The first forecast for 2012, AAA’s Memorial Day Holiday Travel forecast, will be released in mid-May and will provide a reading of Americans’ desire to travel despite higher gas prices.

As North America’s largest motoring and leisure travel organization, AAA provides more than 53 million members with travel, insurance, financial and automotive-related services. Since its founding in 1902, the not-for-profit, fully tax-paying AAA has been a leader and advocate for the safety and security of all travelers. AAA clubs can be visited on the Internet at AAA.com.

AAA is a non-partisan organization providing unbiased reporting of gas prices through its popular weekly Fuel Gauge Report.

WASHINGTON (Dec. 5, 2011) —

Crude oil prices moved slightly higher today, building on the upward momentum of last week.  Equities markets continued to surge on positive signs for the U.S. economy and renewed optimism that Europe may address its debt crisis.  These same factors, along with weakness in the U.S. dollar and geopolitical concerns with Iran, put upward pressure on oil prices as well.  Oil futures are priced in U.S. dollars, and as the currency weakens relative to those abroad, the effective purchasing power of those holding foreign currencies increases.  As this happens, oil futures become a more attractive investment, which exerts upward pressure on prices.  At the same time, mounting geopolitical tension between major-oil-producer Iran and the Western countries that rely heavily on foreign oil — including today’s report that Iran shot down a U.S. drone this weekend — sent prices higher on increased uncertainty surrounding the Iranian supply of crude to Western markets.  The sum effect of this upward pressure was West Texas Intermediate (WTI) crude oil settling three cents higher at $100.99 per barrel at the close of today’s formal trading on the NYMEX.

Last week’s increase in crude oil prices was keyed by positive economic news both internationally and domestically, and geopolitical concerns surrounding Iran.  Global central banks on Wednesday unexpectedly announced a coordinated move to inject liquidity into the financial system and address what has been growing concern surrounding the debt crisis in Europe.  This news helped stock indices surge, with the Dow Jones Industrial Average posting its largest one-day gain in more than a year, and oil prices move higher as well.  The upward momentum for oil prices was dampened by a bearish same-day Energy Information Administration report, which highlighted a drawdown in crude oil stocks but more importantly continued weakness domestic gasoline demand. 

On Thursday the European Union and U.S. announced they would tighten sanctions against Iran over that country’s suspect nuclear program.  This report built on those earlier in the week of Iranian protestors storming the British embassy in Tehran and speculation that the EU could start an embargo on Iranian crude in January.  While Iran warned that such sanctions could send global crude oil prices as high as $250 per barrel, the impact on the market was muted as traders viewed these developments as posturing rather than market moving.  The EU imported 450,000 barrels per day of crude oil from Iran last year and any news that escalates the situation beyond posturing could have a significant impact on crude prices.

Optimism that the U.S. economy is recovering was boosted by data on Friday showing a much better than expected jobs report.  This built on reports earlier in the week that U.S. manufacturing activity had reached the highest level in five months and of positive consumer spending and private sector job creation numbers.  A recovering U.S. economy would be expected to demand more crude oil and put upward pressure on crude prices. 

Since the beginning of October, crude oil prices have increased substantially while retail gasoline prices have decreased.  Crude prices have increased from $75.67 per barrel on October 4 to $100.99 today.  During this same period, gasoline prices have decreased 15 cents per gallon.  This seemingly counterintuitive price movement is primarily due to historically weak demand for gasoline counteracting the upward price pressure traditionally expected with higher crude prices. The weekly Department of Energy report last Wednesday showed domestic petroleum demand of just 17.946 million barrels per day — the lowest weekly number since June 2009.  While gasoline demand was up 177,000 barrels per day from the week prior, this increase was attributed to Thanksgiving holiday travel and was 3.8 percent lower than the same period in 2010. 

The current national retail average price for a gallon of self-serve regular gasoline is $3.28.  Today’s price is two cents cheaper than one week ago and 14 cents cheaper than one month ago but is 34 cents more expensive than one year ago. 

As North America’s largest motoring and leisure travel organization, AAA provides more than 52 million members with travel, insurance, financial and automotive-related services. Since its founding in 1902, the not-for-profit, fully tax-paying AAA has been a leader and advocate for the safety and security of all travelers. AAA clubs can be visited on the Internet at AAA.com.

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