The average price for a gallon of gasoline nationwide has reached $2.93. That is a 24% increase in a year. With Memorial Day marking the start of the heavy driving season and an ongoing increase in oil prices, $3 gas could be a price of the past by mid-summer.
It is too early to know whether $3 gas will curtail the plans of some people to drive this summer. The AAA expects a busy summer on America’s roads:
Memorial Day marks the unofficial start of summer, and Americans will kick off the season by traveling in near-record numbers. According to AAA, more than 41.5 million Americans will travel this Memorial Day weekend, nearly 5 percent more than last year and the most in more than a dozen years. With nearly 2 million additional people taking to planes, trains, automobiles and other modes of transportation, INRIX, a global transportation analytics company, expects travel delays on major roads could be up to three times longer than normal, with the busiest days being Thursday and Friday (May 24-25) as commuters mix with holiday travelers.
AAA’s opinion is that the price will not undermine Memorial Day driving. As for later in the summer, that is another matter.
Fewer drivers may not mean lower gas prices. Issues with exports from major oil-producing nations may trump any decline in driving. At the very least, there is a threat that oil exports from Iran and Venezuela could push Brent crude prices to $90 a barrel, or even $100.
Every time gas breaks $3 on the upside and heads toward $4, economists sound a warning that the economy will be affected. Families with one or more commuters can face reduced discretionary incomes. There are already several theories about how much higher gas prices will erode the benefits of the Trump tax cuts.
Gas at $3 is more a psychological issue than anything else. The difference between $2.99 and $3.01 is not enough, but it will kick off a frenzy of media coverage. That by itself will cause millions of people to worry. And that worry may be only a few days away.