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High gas prices don't mean empty roads

Holiday travelers hitting the road for the unofficial start of summer have some budget adjustments to make with gasoline prices at record highs.
Image: Memorial Day Travelers
A motorhome crosses a bridge as morning traffic moves through the interchanges of freeways 110 and 105 on the eve of the Memorial Day weekend in Los Angeles.David Mcnew / Getty Images
/ Source: The Associated Press

Holiday travelers hitting the road for the unofficial start of summer have some budget adjustments to make with gasoline prices at record highs.

But AAA still expects the roads to be crowded. The auto club estimates 31.7 million drivers will take to the highways. That’s just slightly lower than last year despite the fact that the price of gasoline is more than 60 cents a gallon higher this year.

The auto club says oceans and beaches seem to be the favorite destination.

Unlike last year, oil prices are setting new record highs on a daily basis. That’s pushing gas prices higher, and analysts see no reason for gas not to follow.

“We’re going to blast past $4,” said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and

Analysts predict the average price could rise as high as $3.90 a gallon this Memorial Day weekend and easily blast past $4 in coming weeks. Some analysts predict gas will break past $4 as early as next week.

Some motorists say they are staying closer to home.

‘Feeling a financial pinch’
AAA last week released a survey projecting that the number of Americans traveling more than 50 miles from home over the long holiday weekend will fall nearly 1 percent from last year.

“Many Americans are feeling a financial pinch this holiday weekend from record high gasoline prices and other factors,” said AAA president and chief executive Robert Darbelnet.

About 31.7 million Americans plan to travel via car over Memorial Day weekend, a 1 percent decline from 32 million last year. About 4.35 million will travel via plane, a decline of about half a percent from the 4.37 million who flew last year. Another 1.8 million will travel via train, bus or other type of transportation.

High prices have affected demand for gasoline, which has mostly fallen since January, according to Energy Department data.

Despite the expected drop in travel, Darbelnet notes, “more than 12 percent of the U.S. population will be celebrating the Memorial Day weekend away from home.” Still, a long-term decline in travel due to high prices could hurt the economy's leisure sector, he said.

“If a trend toward higher gas prices and fewer travelers were to continue, it would eventually harm travel-dependent companies that provide employment opportunities and tax revenues in almost every city and town in America,” Darbelnet said.

Other travel costs are also on the rise, AAA said in their report. The average Memorial Day weekend air fare will rise 8 percent from last year, to $179. The average cost of a rental car will jump 45 percent from last year, to $45 a day.

AAA's findings are based on an online survey of more than 2,000 adults, supplemented by surveys of 6,500 people who live in the top 10 travel states. The Travel Industry Association, a trade group, analyzes the data and provides AAA with the forecasts.

Beyond the holiday
Fewer Americans are expected to fly this summer, but don’t expect more empty seats as carriers park planes to help offset surging fuel costs.

The trade group for the nation’s largest airlines earlier this week forecast 211.5 million passengers will travel on domestic carriers between June 1 and Aug. 31. That would be a 1.3 percent drop from last summer.

Airlines are reducing their carrying capacity amid slower economic growth and rising jet fuel prices, the Air Transport Association said.

But planes will be nearly 85 percent full and delays emanating from New York-area airports will remain a problem, ATA President and Chief Executive James May said. Late flights cost carriers more than $10 billion annually, a drag on profits that have them “doing all they can to avoid lengthy delays,” May said.

“It’s in our best interest to minimize those delays to the fullest extent possible,” May said. “They cost us in terms of customer loyalty ... (and) real dollars.”

Some large U.S. carriers last week again raised ticket prices to offset surging fuel costs. Raising fares and charging for extra bags and other amenities have been the preferred coping mechanisms for airlines paying about 82 percent more for jet-fuel than they did a year ago.

Still, May said further fare hikes this summer are “inevitable.”

Rick Seaney, chief executive of airfare research site, does not share the view of analysts who say we’ve hit the “tipping point” on fare hikes — 11 of 15 attempts have been successful this year. But the trade group’s summer forecast and an unusual move by Delta Air Lines in recent days suggest an end to the increases may not just be wishful thinking.

Delta last week raised fares by $20 roundtrip as a fuel surcharge, and its five largest competitors quickly followed suit. But on Sunday, the Atlanta-based carrier rolled back almost half of the increases, largely on flights that service cities where competition is fierce with low-cost carriers Southwest Airlines and AirTran Airways.

“It’s the first time I’ve seen Delta be sensitive about overlap markets,” Seaney said, adding that he’ll be convinced a hike hiatus is coming when demand for business travel slumps.