Officials in the travel and gasoline industries are projecting record travel for the Thanksgiving weekend with motorists seeing the lowest prices in fuel in nearly four years, which they said was encouraging news not only for the American wallets but also for local businesses.
The majority of Americans, 89 percent or 41.3 million road trippers, were expected to drive an average of 549 miles roundtrip during the Thanksgiving weekend, which will be the highest volume for a holiday season since 2007 and will represent a 4.3 percent increase from 2013, according to AAA. AAA anticipated that a little less than 1 million Tennesseans hit the road this weekend.
Don Lindsey, Tennessee public affairs director for AAA, said an increase in travel is indicative of an improving economy.
“The broader picture is that the economy is improving, and so that means we are seeing more travel,” Lindsey said.
“Sometimes we’ve seen increases in travel when the gas prices have also been increasing,” he added. “So the gas prices play a part in (more travel during Thanksgiving), maybe a little more this year than others because they seem so much lower compared to past months, but typically what is the bigger factor is how well we are doing economically.”
The national average price for regular unleaded gasoline has decreased for 60 consecutive days, AAA announced in a press release last week.
The national average for a gallon of regular unleaded was $2.79 as of Friday, the least expensive since Nov. 4, 2010 and 49 cents cheaper than the average price on Thanksgiving Day a year ago at $3.28 a gallon.
In the Knoxville region, that average was even lower at $2.59 per gallon for regular unleaded gasoline, which is 54 cents cheaper compared to $3.14 at this time last year.
Tennessee has the seventh lowest average state gas price in the nation and is one of 40 states where the average price of a gallon of gas is less than $3, according to GasBuddy.com.
Gregg Laskoski, senior petroleum analyst with GasBuddy.com, said he expected retail gas prices to continue to drop in the foreseeable future.
“It’s very hard to make any kind of solid forecast, but I think we can expect a nominal decline in gas prices as long as we see crude trading in this narrow range at $74, $75, $76 a barrel,” Laskoski said. “If we see crude oil drop closer to $70 a barrel, then you could see a more active decline in retail gasoline prices.”
“Barring any unforeseen events it’s possible we could see prices edge a little higher (during Christmas) depending on what OPEC (Organization of the Petroleum Exporting Countries) does when they meet” on Thanksgiving Day. “... Do they want to curb production? Maybe, but will they all be willing to comply with that? That’s doubtful.”
Prices have remained relatively low throughout the year. In early June, fuel prices in Lenoir City were recorded as low as $3.27 a gallon compared to $3.38 in Knoxville.
“During the Thanksgiving week in 2011 the national average price of gas on the Wednesday immediately before Thanksgiving was $3.32 and on the Monday immediately following Thanksgiving it had fallen by 4 cents a gallon to $3.28,” Laskoski said.
Laskoski and Lindsey attributed the recent decline in gas prices to production exceeding demand, relatively few problems at local refineries, crude oil competition and access to cheaper crude oil in different parts of the nation that was not available several years ago. The price per barrel of crude oil has also significantly dropped recently to about $75 a barrel compared to more than $100 this past summer.
“We are still behind I think Saudi Arabia and Russia, but we are very close to the largest supplier of crude oil in the world,” Lindsey said. “And with that has come an increase in the global supply of crude oil, and that typically means a big drop in the price of crude, and that is leading a fall in the price of gasoline as well.”
Laskoski said domestic production has hit its highest level since 1986.
“It’s excellent news for American consumers,” Laskoski said. “Every president of the United States since Eisenhower has talked about the need for American oil independence and autonomy, and right now, we are actually moving closer to that objective. We still have an awful lot of Middle Eastern oil we import on a daily basis, but that amount is declining significantly, and we will probably see further decline in the years to come, but that’s probably only if the politicians and all the regulators stay out of it and let the energy business be successful.
“The energy industry right now is probably the most successful industry in the United States,” he added. “It’s a catalyst for economic growth, but when we handcuff it and tie it down with regulations, like any industry, it’s going to be stifled.”
AAA also said in its press release that air travel this Thanksgiving was expected to be at the highest level since 2007, with 3.55 million Americans taking to the skies. Travelers will encounter moderately higher prices with airfares at 1 one percent higher, mid-range hotels up 8 percent and car rentals costing 10 percent more. Americans will spend an average of $573 during the Thanksgiving weekend by visiting with friends and relatives, dining, shopping and watching sporting events, according to AAA.
“If there is any silver lining for consumers the good news here is that when prices start to go up in that first quarter of the new year they will be going up from a much lower floor than we had seen in previous years,” Laskoski said. “We just don’t know when prices will hit the floor.”
Michigan resident Will Osborne took a pit stop last Wednesday to fill up his vehicle at Bimbo’s Deli and Fireworks gasoline and convenience store in Lenoir City. Noting that prices are “just over $3” in Michigan, Osborne said he has enjoyed the decline in gasoline prices.
For Bimbo’s, its location near Interstate 75 is important for business, especially during Thanksgiving holiday travel, Millie Hooks, a manager at Bimbo’s, said.
“That plays a big part of our sales,” Hooks said about the Thanksgiving holiday. “Because usually if they buy gas they are going to come in and get something else. It just goes from there, but gas keeps coming down.”
Loudon County Trustee Chip Miller, looking to his family’s longtime business, noted that he thought Thanksgiving travel will play a beneficial role on the local economy.
“I think the low gas prices are going to be catalyst for an influx in cash into our local economy,” he said.
For the greater part of 30 years, his family has operated the Exxon gas station at the Interstate 75 interchange on U.S. Highway 321.
With lower prices, gas experts said consumers will more than likely have a little more discretionary spending for the Christmas shopping season.
“I would say it will definitely play a part in a broader spending pattern,”
Lindsey said. “That’s not really my expertise, but I do think there is a good chance of that.”
