OAK BROOK, Ill. -- Seldom, it seems, are three-day weekends accompanied by news of dropping gasoline prices. But as summer's last blastLabor Daynears, that's just what's happening, with the average price of a gallon of regular gasoline slipping below $2.90. This has led AAA to predict a 1.2% increase in the number of people traveling this weekend.
And several industry-watchers expect the gas-price slide to continue. I'd say $2 to $2.50, Tom Kloza, chief oil analyst at the Oil Price Information Service, told CNNMoney. Once you get past September 15, it's [image-nocss] really a downhill game.
With fuel prices slipping, AAA expects no let up in travel for the Labor Day holiday weekend. AAA estimates that 35.2 million Americans will travel 50 miles or more from home this holiday, a 1.2% increase from the 34.8 million who traveled last year.
Approximately 29.6 million travelers (84% of all holiday travelers) expect to go by motor vehicle, just over the 29.1 million who drove a year ago. Another 3.9 million (11% of holiday travelers) plan to travel by airplane, down from the 4.0 million that flew last Labor Day holiday. A projected 1.6 million vacationers (4.5%) will go by train, bus, or other mode of transportation, down from about 1.7 million a year ago.
Labor Day brings this strong summer travel season to a close, said Robert L. Darbelnet, president and CEO of AAA. Despite seeing gas prices at record heights this summer, Americans have traveled nonetheless, and the recent price drops certainly won't stop them from traveling through Labor Day.
Darbelnet added, however, Travel will be up only slightly this holiday weekend. Both high gas prices and the increasing number of school systems that start before Labor Day contribute to the small increase in expected travel.
Still, a majority of respondents to a Kraft/CSP Daily News Poll said they expect their Labor Day store sales to be the same (34%) or better (44%) than 2005 sales; 20% said they expect sales to be worse, and 2% said way worse. There were 182 respondents to the poll.
The forecasted 1.2% increase in Labor Day travel is the second smallest expected rise since Memorial Day 2003, when holiday travel began to rebound after the 9/11 attacks and Iraq invasion, AAA said. In 2005, Labor Day travel increased by only 0.9% over 2004, which had a 2.4% increase from the year before. In 2003, the rate of increase was 1.8%, AAA said.
Online gas-price-survey site Gasbuddy.com shows Wednesday's national average at $2.80, according to the CNNMoney report.
An analyst pointed to a 60-cent drop in wholesale and spot prices the last few weeks, noting consumers should see a similar drop in retail prices in the coming few weeks as the decline works its way through the market. The drop would translate to retail gasoline prices of around $2.50 to $2.60 a gallon. The levels that were in place were never justified to begin with, Mark Gilman, an analyst with The Benchmark Co., told CNNMoney. This is a bit of a return to reality.
Gilman said retail gasoline prices of around $2 a gallon by Thanksgiving were certainly possible, although not likely. He said crude prices would need to drop by about $20 a barrel to have that effect, and he just didn't see any major catalyst that would cause such a decline over the next three months.
Kloza said several factors are behind the recent gasoline price declines: the end of the summer driving season, which reduces consumer demand for gasoline as well as the end of seasonal federal requirements on gas that makes the cost of importing and refining it cheaper.
The price of gasoline's main component, crude oil, has also slipped in recent days. Crude oil, accounting for about half the price of gasoline, closed below $70 a barrel Tuesday for the first time since June 20.
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