Gas guzzlers Rejoice!
Gas Prices resume their downtrend. The great retreat at the pump is coming soon yet could more rain threaten the impending price drop?
Well it is all about gas prices as we edge closer to the Memorial Day holiday weekend. RBOB gasoline futures dipped below $2.90 again as hopes reign supreme that we will see massive relief at the pump very soon and Triple AAA released their holiday travel forecast.
Barbara Powell at Bloomberg News reports that, “The number of Americans taking to the skies during the Memorial Day holiday weekend will jump to the most since 2005, while the number of drivers slips for the first time in three years as gasoline prices flirt with $4 a gallon. Air travelers during the holiday will jump 12% to2.93 million, while trips by auto will fall 100,000 to 30.9 million, according to a forecast by the American Automobile Association, the biggest U.S. motoring organization. About 88% of travelers will drive to their destination. Overall, about 34.9 million people will travel 50 miles or more from home during the three-day weekend culminating in the May 30 holiday, Heathrow, Florida-based AAA said. That’s a 0.2% increase from 34.8 million during the 2010 holiday period and the second rise since 2004.
Memorial Day marks the traditional beginning of the summer travel season and the peak period for gasoline use. This year, the holiday falls a day earlier than in 2010. Weekend holiday travel tends to be more robust when the holiday falls later in the month. Holiday airfares will be 14% higher than a year earlier, with an average lowest round-trip rate of $201 for the top 40 U.S. air routes. The average distance traveled will be 792 miles, up from 626 miles in 2010. Median spending will fall 14% to $692 from $809 last year, AAA said. Other modes of transportation, including rail, buses and boats, will be used for about 3 percent of trips, AAA said. Regular gasoline at the pump, averaged nationwide, fell 2.1¢ to $3.905 a gallon yesterday, up 37% from a year earlier, AAA said on its website. A survey of intended travels found that six out of 10 said that higher prices at the pump would not affect their travel plans.”
Yet could the floods still put upward pressure on gas prices? Conn Money reports that, “nearly 15% of the nation's refining capacity and hundreds of oil wells are at risk as the flood crest along the swollen Mississippi river makes its way into Louisiana over the next few days. Flooded refineries would have the most impact on the nation's oil infrastructure and, hence, could send gasoline prices higher.” CNN Quotes API John Felmy as saying, “Eleven refineries -- producing over 1 million barrels of gasoline a day -- lie in the flood waters path in total, the U.S. produces about 8 million barrels of gasoline a day.”Refiners are busy fortifying the facilities with earthen berms and other measures to protect the multi-billion dollar plants, and major damage is not expected. But barge traffic, crucial in getting crude supplies in and gasoline out of the plants, might be impacted for up to several weeks. Engineer’s fear the wakes from large boats could cause water to overflow the levy banks, and have restricted barge traffic already. If refinery operations are disrupted further a spike in gas prices are possible.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.