Americans Gear Up for Summer Driving Season
According to the U.S. Energy Information Administration (EIA), the official summer driving season lasts from April through September. Unofficially, the season begins in earnest with the Memorial Day weekend, when millions of Americans are unleashed upon the open road in their summer driving endeavors.
The American Automobile Association (AAA) projects a record-high 45.1 million Americans will travel domestically over the Thursday, May 22 through Monday, May 26 Memorial Day weekend. This is up 1.4 million (3.2%) from last year and up 5.4% from its 2019 pre-pandemic level. AAA estimates 39.4 million (87%) will travel by car while 3.61 million (8%) will travel by air. The remainder of the 45.1 million holiday-seekers will travel by train, bus or embark on a cruise.
One thing Memorial Day travelers can expect this year is lower prices. Over the past 12 months, airline fares have declined 7.9% while the price of lodging, which includes hotels and motels, has fallen by 2.3%. But one of the biggest declines has been in gasoline prices. The EIA reports that the national average for a gallon of regular gas is $3.12, down 13.5% over the past year. The EIA expects gas prices to hover around the $3.14 mark throughout the duration of the summer driving season.
Lower gasoline prices are the result of declining crude oil prices. As the cost of crude oil falls, so do its many distillate products – gasoline, heating oil, kerosene and jet fuel, among others. The benchmark grade of crude oil produced in the U.S. is West Texas Intermediate (WTI), which serves as one of three main pricing barometers of the global petroleum industry, alongside North Sea Brent and Dubai crude. Weeks ago, WTI reached a four-year low of $55.12 per barrel.
Gas prices vary extensively from one state to the next. Even within an individual state, the price you pay at the pump tends to be much more in big cities than in rural areas. With little surprise, California leads all 50 states with the highest average cost in the land at $4.92 per gallon. Rounding out the Top 5 are No. 2 Hawaii ($4.50) followed by Washington ($4.33), Nevada ($3.96) and Oregon ($3.95).
Mississippi has the cheapest average cost at just $2.66 per gallon. That’s 46% cheaper than California. The other Top 5 states for cheap gas are Tennessee ($2.72), Louisiana ($2.73), Alabama ($2.77) and Texas ($2.81).
Illinois has the seventh highest average price in the nation at $3.40 per gallon, $0.28 above the national average. In Chicago, the price skyrockets to $3.75 per gallon.
Iowa, by comparison, has the sixteenth lowest average price at just $2.95 per gallon, a wallet-friendly $0.17 cheaper than the national average.
Here in the Quad Cities, as is usually typical, the price you pay for a gallon of gas is heavily dependent on which side of the river you fill up on. On the Illinois side, the average price for a gallon of regular gas is $3.34. However, you can save some big bucks by filling up on the Iowa side of the river, which is $0.42 cheaper at just $2.92 per gallon. If you have a larger size car with an 18-gallon tank, like an SUV, that’s a savings of around $7.56 per fill up. For smaller cars with a 12-gallon tank, you’ll save around $5.04 per fill up.
Whether you’re staying local or you’ll find yourself among the millions of holiday travelers, I wish you all a very happy Memorial Day Weekend!
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
