Will rising gas prices put a U-turn in holiday travel plans?
Not according to AAA, which expects 37 million Americans to travel during the Memorial Day weekend, the most since 2005. The group expects 2.31 million people in Southern California to hit the road.
Driving, AAA says, will be the top choice for travelers nationwide as 9 out of 10 travelers, or 33 million people, will use a vehicle to get to their holiday destination.
Consumer confidence in a bolstered economy and generally lower gas prices are the primary reasons for the renewed increase in travel, the group said.
Despite the recent uptick in gas prices, Marie Montgomery, spokeswoman for the Automobile Club of Southern California, said Orange County residents are still paying a lot less per gallon than they were this time last year. At $3.97, the average gallon of gas in Orange County is the cheapest it has been leading up to Memorial Day weekend since 2009.
“People don’t remember from year to year what they were paying for gasoline, but it’s a six-year low for the pre-Memorial Day travel period,” she said.
Montgomery added that even when gas prices are high, it’s still more affordable for a family of five to drive than to fly to popular Memorial Day destinations such as Las Vegas and San Francisco.
John Felmy, chief economist at the American Petroleum Institute, said lower gasoline prices this year have saved the average household around $750 at the pump. Lower fuel prices also have led to savings on natural gas and electricity, giving some Americans extra money to spend on travel.
In the past month, however, California has seen gas prices increase about 77 cents per gallon. Though prices have started to level out, they’re still well above the nearly $2-per-gallon lows seen at the start of the year.
Villa Park resident Juan Soto, 46, said his family decided not travel for the holiday because of rising prices at the pump.
“I’m going to spend the day at home and spend the money on my kids and on some nice rib-eyes for my family instead,” he said.
When prices were lower at the beginning of the year, he did a lot more traveling, and he will in the summer – if gas prices continue to fall like they have this past week.
DOMINO EFFECT
As the price of crude oil has risen, so, too, have gas prices.
“Over the last several weeks, they’ve risen about 41 cents per gallon in California, and gasoline nationwide was up 27 cents per gallon,” Felmy said.
California has one of the largest gas taxes in the country. It also uses a unique blend of gasoline that differs from that used by the rest of the country. So when California loses fuel supply for any reason, it cannot simply ship it in from another state.
That is a large part of why gas prices rose this past month. At the end of April, Chevron’s Richmond refinery had a flare-up leading to a partial shutdown, and the Tesoro refinery in Martinez briefly shut down after operational glitches. Both plants since have reopened. A refinery in El Segundo also underwent some maintenance issues.
And an explosion at an ExxonMobil refinery in Torrance in February was a major factor in the price bump motorists felt at the beginning of the year.
Jamie Court, president of consumer advocacy group Consumer Watchdog, said oil companies in California are “making a profit from the down refineries and the tightened supply.” He contended oil executives keep only 10 days of supply at refineries, letting them to make “big profits every time a refinery goes down.”
Felmy called the claims “pure garbage” and added that refiners lost money last year.
“You have a tight market, so when you have a problem with suppliers, you have a supply and demand imbalance. In California, there are high taxes, specialized fuel, demand increase, higher costs of summer blend gasoline, so this is all supply and demand,” he said.
The American Petroleum Institute is a national trade association for the oil and natural gas industry. It represents around 400 corporations that are involved in the industry.
Gas prices shot up quickly a few weeks ago but since have leveled out. Montgomery expects gas prices in California to continue to drop. “At some point in the next few weeks we do expect them to drop because we are getting some imports shipped into California. Once that gets into the supply, we expect prices to start to decrease,” she said.
Most people make travel plans far in advance, but the recent change in gas prices could affect last-minute planners, Montgomery added.
Susana Gonzalez, 24, of Santa Ana said she currently doesn’t have plans to travel during the long weekend but “would go somewhere if prices fall.”
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