On top of stray deer and getting carsick, the skyrocketing price of gas has been the bane of summer road trips. But this year is different.
Some analysts predict fuel costs will rise above $3 per gallon during the heavy driving season, but gas prices have fallen as low as $2.33 per gallon in the Chattanooga area, a situation sure to be popular with drivers packing the family minivan for a Memorial Day weekend road trip.
Fuel costs typically rise sharply in the spring each year and level out during the summer before falling to end up slightly higher than they started, according to Don Lindsey of AAA.
This year the cost of fuel has steadily dropped, a prospect that should lead 32.4 million Americans – somewhat higher than the number last year – to travel over 50 miles from home for Memorial Day, AAA said.
“The European Union is struggling and the euro is losing value,” Mr. Lindsey said. “That whole situation has been largely responsible for pushing oil prices down $15 per barrel.”
In contrast, the U.S. Energy Information Administration had predicted in March that the average U.S. price for gas would exceed $3 per gallon during the 2010 spring and summer.
While a small drop in the price of gas probably won’t make a huge difference in tourism for the city, it will be good for the city’s tourism industry if gas prices continue their descent, according to Bob Doak, President and CEO of the Chattanooga Area Convention & Visitors Bureau.
“When you look at lower fuel prices and a holiday weekend, we believe that people will travel, and when we checked around to the local hotels, the bookings look good this weekend,” Mr. Doak said. “We have 10 million people within a 21/2 hour driving radius, and if you do the math, it’s really incrementally not that expensive to travel here, although there’s somewhat of a psychological element to cheaper gas.”
WILL TRAVEL RISE?
Dr. Ziad Keilany, chairman of UTC’s economics department, agreed that the price drop is highly unusual, but he said he hasn’t yet seen increased travel in response to the cheaper fuel.
“Normally in May, the prices start going up, but maybe people don’t have jobs, their income is declining or they’re worried about economic conditions,” Dr. Keilany said.
Motorists don’t appear to be driving more to take advantage of lower pump prices, he said, which according to one theory could mean consumer confidence has taken a hit as a result of recent economic uncertainty surrounding the European financial crisis and the nascent U.S. recovery.
Dr. Keilany’s colleague in economics at UTC, Dr. Michaël Bonnal, said that with many area residents depending on their cars as a sole means of transportation due to the lack of public transportation, the role of gas prices on the habits of area residents is diminished.
“The public seems to be lethargic about (declining prices); they don’t seem to be reacting in any way,” Dr. Keilany said. “Economic conditions are still a little bit uncomfortable for people so they’re watching their money and they’re not driving a lot.”
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