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Labor Day holiday travel expected to rise in US, boosting fuels demand

08.31.2012  |  Ben DuBose,  Hydrocarbon Processing, 

Despite a sluggish economy and recent hikes in gasoline prices, the increase in expected US travelers is largely driven by improving consumer confidence, a survey finds.

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By Ben DuBose
Online Editor

HOUSTON -- The American Automobile Association (AAA) projects 33 million Americans will travel 50 miles or more from home during the Labor Day holiday weekend, a 2.9% increase from the 32.1 million people who traveled last year.

That could well increase demand for fuel products such as gasoline and diesel.

The total number of Labor Day holiday travelers is expected to reach a new post-recession high, and is the third increase in holiday travel this year, according to the forecast from AAA and consulting firm IHS Global Insight.

The Labor Day holiday travel period is defined by the forecast as Thursday, August 30, to Monday, September 3.

Earlier in the year, AAA’s Memorial Day and Independence Day holiday travel forecasts projected increases of 1.2% and 4.9%, respectively.

Despite a sluggish economy and recent rises in gasoline prices, the increase in expected travelers is driven by improving consumer confidence compared to one year ago, the trade association said.

“In the absence of strong economic growth that might fuel a significant boost in travel volume, it is an encouraging sign that Americans continue to prioritize travel,” said Bill Sutherland, vice president, AAA Travel Services. “Travel is still within America’s discretionary spending budget.”

Automobile travel up 3.1%

Approximately 28.2 million people (85% of holiday travelers) will make their Labor Day trip by automobile.

This is a 3.1% increase over the 27.3 million people who took to roadways in 2011, according to the trade association.

Number of air travelers expected to increase by 3.7%, airfares decrease

Labor Day air travel has been fairly consistent since the recession bounce back began for the travel industry in 2010, AAA said. About 2.55 million leisure travelers (8% of holiday travelers) will fly during the Labor Day weekend, a 3.7% increase over 2011 when 2.46 million traveled by air.

In 2010, 2.6 million chose to fly, beginning a steady recovery from the decade-low 1.5 million air travelers in 2009. Airfares decreased 4% over last year with an average lowest round-trip rate of $197 for the top 40 US air routes, the AAA reported.

The remaining 7% of Labor Day travelers are expected to use other modes of transportation, including cruise ship, rail and bus, accounting for 2.3 million Americans – a nominal 0.2% decrease from 2011.

Average travel distance, spending both increase

According to the survey of intended travelers, the average distance traveled during the Labor Day holiday weekend is expected to be 626 miles, up slightly from last year’s average of 608 miles.

The increase in expected air travel is a contributing factor to the slight lift in the average travel distance, as air trips typically span longer distances than automobile trips, many over 1,500 round-trip miles.

Median spending is expected to be $749, a small increase over the $702 spent a year ago.

Impact of gasoline prices on travel plans

US gasoline prices have fluctuated and been particularly sensitive to region variations throughout much of the year, the AAA reported.

On April 5 and 6, motorists saw a year-to-date peak average price of $3.94/gal for regular gasoline. As of last week, the average US price of regular gasoline is $3.72/gal, according to AAA which is 22 cents less than the April peak and 14 cents more than last year’s price.

With possible regional exceptions such as Louisiana in the aftermath of Hurricane Isaac, gas prices are not expected to have a major impact on Labor Day travel.

Historically, incidents that impact regional gas prices and regional travel have not impacted nationwide holiday travel, AAA noted.



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