Video: Gas prices head south for the holiday

msnbc.com staff and news service reports
updated 9/1/2006 8:14:26 PM ET 2006-09-02T00:14:26

More Americans are expected to travel over the upcoming Labor Day weekend than last year as fuel prices slip from their recent highs, the American Automobile Association said Thursday.

AAA estimated that 35.2 million people will travel 50 miles or more from home this holiday, up 1.2 percent from last year.

"This is the first time I think in recent memory that I have ever seen gasoline prices go down before the holiday," said Phil Flynn, energy analyst for Alaron Energies. "It's going to be a tank-toppers delight."

Average U.S. gas prices have dropped more than 20 cents over the past month to $2.79 a gallon, according to travel agency AAA. The drop in prices at the pump has provided a bump in consumer confidence and the overall economy.

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“The gasoline bull market is definitely over,” said Michael Lynch, director of Strategic Energy and Economic Research Inc. of Winchester, Mass.

Tom Kloza, director of Oil Price Information Service, predicted that pump prices could fall to $2.65 a gallon as early as next week given the huge drop at the wholesale level since early August. But he does not believe wholesale prices have much farther to fall.

For this holiday weekend, this slide in prices is welcome news for motorists.

"Travel will be up only slightly this holiday weekend. Both high gas prices and the increasing number of school systems that start before Labor Day contribute to the small increase in expected travel," Robert Darbelnet, president and chief executive of AAA, said in a statement.

About 84 percent of U.S. travelers will be driving, 11 percent will travel by plane, with the remainder going by trains, bus or other transportation, the auto club said.

The forecast 1.2 percent increase for Labor Day is the second smallest expected rise since Memorial Day 2003, when holiday travel began to rebound after the Sept. 11 attacks and Iraq invasion, AAA said.

The club said nationwide gasoline prices currently average $2.92 for a gallon of self-serve regular gasoline — down almost 7 cents from a month ago and about 32 cents higher than a year ago.

The Automobile Association said its leisure travel index shows other vacation costs are also on the rise, with hotel rates some 5 percent higher from a year ago for a moderately-priced hotel room, car rental rates up an average of 14 percent and airfares down about 1 percent.

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