June 30, 2005
U.S. holiday drivers will have gasoline, at a price
By Robert Gibbons
NEW YORK (Reuters) - Skyrocketing gasoline prices will addmore fireworks to the Independence Day holiday for U.S. driversthis year, but record travel is still forecast and supplyshould be plentiful, industry experts said on Thursday.
U.S. average retail gasoline prices are up 29.4 cents froma year ago at $2.215 a gallon, according to the U.S. EnergyInformation Administration's weekly survey released on Monday.
Travel group AAA expects a record 40.3 million people willtravel 50 miles or more from home this holiday, a 2.8 percentincrease from 2004.
"Travel should be higher even than the Thanksgivingholiday, normally the holiday period with the most travelers,"said AAA spokesman Justin McNaull.
Approximately 34 million travelers, or 84 percent, expectto go by motor vehicle. That would be a 2.6 percent increasefrom 2005. AAA pegged the average retail price Thursday at$2.22 a gallon, up from $1.91 a year ago.
Prices will be higher, but gasoline supply should beplentiful, according to Paul Fiore, executive vice president atindustry group the Service Station Dealers of America.
"There is no supply problem anywhere that we are aware of,"Fiore said.
Fiore urged motorists to heed the usual advice for gettingmore miles per gallon, including keeping motors tuned and tiresproperly inflated.
While gasoline prices are 15 percent more than a year ago,they are still below the April record high of $2.28 a gallonreported by the EIA. Even that April record was below theinflation adjusted most expensive pump price of $3.08 a gallonin March 1981.
High prices have not yet caused U.S. drivers to cut back onconsumption, according to Fiore and AAA's McNaull.
"Everybody has been wondering when will the consumerreact?" Fiore said. "They haven't so far. They're still outthere purchasing gasoline. Demand and consumption are up."
"Our auto counselors that deal with our members are notreporting customers saying, 'I'm not going now,' because ofprices," McNaull said.
U.S. refiners' cranked up gasoline production last week toa near-record 9.1 million barrels per day, the EIA said,helping meet demand running at 9.4 million bpd.
U.S. gasoline inventories last week were 3.8 percent higherat 216.2 million barrels, up 8.4 million barrels from theyear-ago period.
Concern that growing global oil demand might outpace supplywhen the peak Northern Hemisphere heating season comes late in2005 and early in 2006 helped push crude oil futures prices toa front-month record $60.95 a barrel on Monday.
On Thursday, front-month August crude futures on the NewYork Mercantile Exchange settled at 56.50 down 76 cents.
AAA expects the greatest number of holiday auto travelerswill originate in the Southeast with 8.6 million, followed bythe West, Midwest, Northeast and Great Lakes regions.
AAA's survey expects another 4.6 million travelers to taketo the air, putting airplane travel up 4.2 percent from 2004.Another 1.8 million vacationers will go by train, bus, or othermode of transportation, up from about 1.7 million.