Memorial Day weekend could kick off long, hot summer for gas prices
Soaring gas prices have Americans bracing for an expensive Memorial Day weekend, the traditional start of the summer when vacation-related travel typically spikes.
Despite the increases — last week, every state had gas prices over $4 for the first time ever — AAA is predicting travel for the three-day weekend will return to near pre-pandemic levels.
In its forecast, AAA projected an 8.3 percent increase in travel compared to Memorial Day weekend in 2021, or 92 percent of 2019 levels. Car travel in particular will reach 93 percent of pre-pandemic volume, the group predicted.
Policymakers are eyeing holiday travel for insights into how to approach pain at the pump.
“Everybody’s feeling the pain now, or they’re going to as we’re coming out of the big travel weekend, when everyone pays attention,” Sen. Kevin Cramer (R-N.D.) told The Hill. At the end of the long weekend, Cramer said, “I think we’ll have some data that will be helpful, will be instructive as we consider what to do next.”
Devin Gladden, AAA National’s manager for federal affairs, said travelers are hitting the roads to make up for lost travel time during the pandemic.
“However, with gas prices being at highs that they have not seen before, they certainly are going to be looking for ways to save money during their trips,” he said.
Gladden added that demand has cooled somewhat in the past week but said it is likely to spike again with the weekend.
“We could see demand settle back lower, which could again take some gas out of price increases as crude prices remain volatile,” he said.
“Refiners normally build up their inventories in the spring as summer demand is expected to exceed day to day refinery production in the summer months. This year however we’re entering the peak driving season with abnormally low stocks,” Antoine Halff, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, told The Hill in an email earlier this month.
“Furthermore, Europe, which normally ships excess gasoline production to the US East Coast, may not be able to do so this year following Russia’s invasion of Ukraine,” she added.
Another X-factor, Gladden noted, is the possibility that high prices may spur travelers to find another mode of transportation.
“Air travel would certainly be an alternative as well as, if they’re taking regional trips, there may be some train options as well,” he said. “And we’re noting that because travelers want to make up for lost time they may be more willing to travel further distances, even at higher costs given that inflation has increased jet fuel costs, as well as other travel expenditures, particularly if you’re traveling abroad.”
The Biden administration has taken several steps to ease or offset gas prices, including the largest-ever release from the Strategic Petroleum Reserve and removing seasonal restrictions on the sale of certain ethanol-heavy fuel blends. However, numerous other factors causing prices to rise are beyond government control, such as the Russian invasion of Ukraine.
Another factor is one of the major causes of the original increases, a sudden spike in demand for gas after demand plunged in the first year of the COVID-19 pandemic.
A number of weaker refineries closed during the initial wave of the pandemic, and the U.S. has lagged in replenishing the lost stocks, according to Halff.
The Memorial Day driving season will begin with inventories better suited for the end of the driving season on Labor Day weekend, said Halff.
“On top of that, U.S. and international sanctions in Russia have already stopped the flows of Russian oil into the U.S. and are about to do the same for shipments to Europe, thus fueling concerns over a dramatic acceleration of supply constraints over the peak summer season,” he said.
Halff added that the Biden administration’s options to directly affect prices are limited as the year wears on. Steps that could help, such as development of alternative fuels or improved refinery operations, would likely be effective in the long term but take too long to implement to be useful.
Gladden noted that while demand is likely to spike over the weekend, the picture for the summer as a whole is harder to predict.
“It’s still an open question about what demand will look like for the summer as prices remain high,” he said. The softer demand suggests that prices may be so high that the expense itself could drive demand down, he added.