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More States Seeing Gas Prices Under $2 a Gallon

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Gas prices have fallen under $2 in 13 states
As many people traveled this past weekend, they may have noticed how much cheaper it is to fill up their car’s tank. With thirteen states reporting gas at below two dollars per gallon at some gas stations, it should not be long before other stations follow suit as the price of crude oil continues to drop.

It wasn’t that long ago that the average price of gas fell below $3 a gallon. With the average price nationwide now standing at at $2.53 per gallon, it should come as no surprise that thirteen states have gas stations selling for less than $2, at least in some areas. The US is enjoying a holiday season reprieve from high prices seen as little as 6 months ago. As a nation, we have not seen prices this low since October 2009.

Oklahoma, Louisiana and Ohio have stations that are selling gas at $1.90 a gallon. With all the holiday driving that many people do, most people are actually smiling as they fill up their tanks. There are ten additional states that have prices lower than the two dollar mark as well – Alabama, Arizona, Colorado, Indiana, Mississippi, Missouri, Nebraska, New Mexico, Texas and Virginia. Missouri is the state with the lowest average price overall at $2.25. AAA reported some states have only one or two stations with prices this low, but that’s all it takes for other stations to follow to continue a trend.

The good news is these may not be the lowest prices we will see. Crude oil prices have dropped from $115 a barrel to under $58 a barrel. Three factors are causing the lack of demand for the supply. Saudi Arabia’s confidence in the market righting itself has caused them to refuse cutting back their production of crude oil. There is a slow down in construction and expansion in Europe and especially Asia, specifically China who has dominated a lot of the oil supply over the last decade. And last but not least – more fuel efficient cars that demand less gas have started to cause a small dent in how much the world uses in cars.

With it appearing there’s no stopping gas prices from continuing to fall, consumers are starting to spend more this holiday season. As retail spending rises, more jobs may be created to off-set the possible job losses from the United States shale oil production market.

The low prices also entice people to travel more, at least by car. It may not be the same for plane travel (at least not yet) as the falling oil prices have yet to yield lower plane ticket prices. If enough people opt for their cars, it may not be long before public pressure causes airlines to look at their pricing structures as well.

(Photo courtesy of KOMUnews)

AAA Predicts More Travelers and Higher Gas Prices This Fourth of July

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AAA: more roadtrips and higher gas prices on Fourth of July 2014
There are going to be more cars on the road this Fourth of July, and the most since 2007, according to AAA travel. An estimated 4.1 million Americans will be on the road traveling 50 miles or more away from their homes. This is up from 40.3 million people who traveled last year, and a 14% increase of people on the road compared to Memorial Day weekend. AAA says the main reason fueling the increase in travel comes from the willingness of travelers to use their credit cards to take on debt, and not from an increase in household income, which often drives an increase in travel.

The Fourth of July weekend is typically the busiest travel weekend of the year since it’s the one major holiday which coincides with kids being out of school for summer vacation. It’s also a time when many families take their yearly family summer vacation.

Higher Gas Prices

Even with gas prices at the highest level for the holiday weekend since 2008, the higher fuel costs aren’t expected to keep people out of their cars. Gas prices typically fall in June with the run-up to the Forth of July weekend, but that hasn’t been the case this year as oil prices have remained high due to geopolitical uncertainty in Iraq. Current gas prices are approximately $0.20 higher than they were the same time last year. While gas prices aren’t expected to stop people from traveling, AAA notes it might cause consumers to cut back spending in other areas like dining, shopping and other travel-related activities.

Higher Hotel Prices

It’s not only gas which will cost more. Hotels will also be more expensive than last year. AAA estimates lodging at hotels rated on their scale as three diamonds will cost 9% more with travelers having to spend an average of $178 a night, up from $164 in 2013. More budget-friendly two diamond hotels will see an even a bigger increase, costing 15% more than 2013, for an average price of $137 a night.

Car Rentals Unchanged

For those looking to rent a car for the weekend, they’ll pay approximately the same amount as they did last year. The daily rate for weekend car rentals is expected to remain steady at approximately $58 a day.

Lower Airfare Prices

The big financial winners this year are those who will be traveling by plane to their destination. AAA says airfares are 5% lower than in 2013, with discounted fares to the 40 top US routes averaging $215, $13 less than the $228 average last year. The number of people traveling by air is expected to increase from 3.07 million last year, to 3.1 million this year.

AAA predicts more travelers and higher gas prices for Independence Day weekend
While the prediction that more consumers are going to be traveling this holiday will be seen as good news for the economy, the fact that they’re doing so by putting it on their credit cards isn’t a good sign for their personal finances. Trips and vacations put on credit cards end up being much more expensive due to the interest charges which accumulate over time as the debt is being paid off. This can easily add several hundred additional dollars to the cost, depending on the amount spent, the interest rate on the card, and how long it takes for debt to be paid off in full. Consumers would be much more financially wise to plan a less expensive trip which they could pay off in full without adding any debt to their credit cards.

(Photo courtesy of Nicholas A. Tonelli)