US fuels demand hit by weaker Memorial Day holiday travel
By DAVID BIRD
NEW YORK-- The uncertain economy will slow travel over the Memorial Day holiday to a two-year low, according to a survey by travel group AAA.
Air travel in the May 23-May 27 period is expected to drop 8% from a year earlier, while the number of Americans hitting the roads at the start of the peak driving season is expected to inch up by 0.3%.
AAA projects 34.8 million Americans will travel 50 miles or more from home during the holiday, down 0.9% from a year earlier.
The drop off is due to "an up-and-down economy", said Robert L. Darbelnet, AAA president and chief executive.
Eighty-nine percent of travelers, or some 31.2 million, are expected to make trips by car over Memorial Day, up from 31.1 million during the 2012 holiday. That's the most holiday drivers since 2005, but a huge 16.4% below the number back then.
AAA surveyed travelers in early April, when the national average price of gasoline was around 10 cents a gallon lower than now and about 9% below a year earlier. More than 60% respondents said prices wouldn't impact their plans.
The nationwide price of regular gasoline on Wednesday was $3.66/gal, up 4% from a month ago, and 2 cents below the year-earlier level, AAA said in its Daily Fuel Gauge Report.
But prices in 17 states top year-earlier levels by an average of nearly 30 cents/gal, due to rising crude-oil costs and refinery slowdowns.
AAA said nationwide pump prices likely will stay high and may reach a two-year high for the Memorial Day holiday, topping $3.64/gal in 2012.
"The primary driver of the decline in holiday travelers is an eight percent decrease in the number of people expected to take to the skies this holiday," Mr. Darbelnet said. "American travelers are experiencing fee fatigue and frustration with everything from higher fares to airport security. As a result, many are choosing road travel in higher numbers due to the lower cost and convenience it offers."
AAA said air fares for the top 40 routes are up 10% from a year earlier for the holiday period.
Median spending over the holiday is expected to drop by more than 6% from a year earlier, to $659 from $702, with fuel costs accounting for 16% of expenses, up 4.2% from a year earlier. The average journey is projected to be 690 miles, up from 642 a year earlier, with drivers extending their range. Trips of less than 150 miles made up 21% of all holiday travel last year, but will account for just 13% this year, AAA said.
Car-rental costs will be at a four-year high for the holiday and up 19% from a year earlier, while hotel rates are flat to 4% higher, AAA said.
Dow Jones Newswires