4 Reasons Fourth of July Driving Could Be Record-Breaking

CHICAGO -- The 2017 summer driving season could be one for the record books.

That’s according to recent consumer surveys and research conducted in advance of the Independence Day holiday, one of the peak travel occasions of the summer driving season. While gasoline demand in these first weeks of summer has been lower than usual, low pump prices and strong consumer optimism could counter the trend.

Here are four reasons that the Independence Day holiday weekend could return demand to seasonal norms ...

As summer begins, Americans are in much more of a driving mood than in recent years, according to NACS’ most recent Consumer Fuels survey. In the June 2017 survey, the percentage of consumers who planned to drive more in the coming month jumped 11 points compared to the June 2016 survey, hitting 29%. This is a record June high for the survey, which NACS has conducted since 2013.

Nearly 60% of consumers said they felt optimistic about the U.S. economy. NACS believes that low gasoline prices are behind the optimistic outlook and interest in driving. In fact, 80% of consumers said that gas prices affect their feelings about the economy.
 
That said, consumers have noticed a trend toward higher gas prices over the past month. They reported a median price of $2.35 per gallon. Consumers in the West were most likely to report higher prices over the previous month, while those in the South were least likely. That might help explain why Southern consumers were most optimistic about the economy compared to other regions (62%).
 
Penn Schoen Berland conducted the online survey of 1,100 U.S. adults who purchase fuel for a vehicle at least once a month on behalf of NACS from June 6-9, 2017. For a summary, click here.
 

This strong economic sentiment is putting Americans in the traveling mood. AAA, Heathrow, Fla., expects a record 44.2 million Americans to travel 50 miles or more on the upcoming Independence Day holiday, or 1.25 million more than in 2016. Of these travelers, nearly 85%—or 37.5 million—will drive. This represents a 2.9% increase from 2016. Since 2012, travel volume has grown 10% for the Independence Day weekend. AAA defines the 2017 holiday travel period as Friday, June 30, to Tuesday, July 4.

“Combined, strong employment, rising incomes and higher consumer confidence bode well for the travel industry, in particular this Independence Day weekend,” said Bill Sutherland, senior vice president of travel and publishing for AAA.

AAA’s holiday travel projections are based on economic forecasting and research by IHS Markit, London. For the complete Independence Day holiday travel forecast, click here.
 

Gasoline prices this Independence Day are set to hit their lowest point for the holiday since 2005, according to GasBuddy, Boston. It expects the national average for July 4 to be $2.21 per gallon, vs. the 10-year average of $3.14 per gallon.

That said, GasBuddy expects gasoline price variance—or the spread between the lowest and the highest price in a given market—to reach “historic highs” for July 4. For example, an SUV driver could pay an average of $11 more per fill-up if they bought gas on the high end of the price spread in their market, and a small-car driver could pay $6 more per fill-up.

The national spread between the highest- and lowest-priced gas station on June 27 was at $1.29 per gallon, which is higher than the 10-year average of 98 cents per gallon (CPG). For the highest- and lowest-priced gas stations in the same state, the average spread was 51 CPG.

Also noteworthy: For the first time since GasBuddy began tracking prices 17 years ago, the projected national average for July 4 is set to be lower than that for New Year’s Day. On any given year, the national average has been 47 CPG higher on Jan. 1 than July 4.
 

The low gas prices mean Americans are feeling less affected by them as they make plans for the Independence Day weekend, according to a survey conducted on behalf of the National Retail Federation (NRF) by Prosper Insights & Analytics. Thirteen percent of consumers, or 32.9 million Americans, said they planned to travel out of town for the holiday, which is up from 31.1 million in 2016.

Of those surveyed, just 18% said that gasoline prices would influence their plans. This is not only three points lower than in 2016 but also a record low for the survey, which NRF, Washington, D.C., has conducted since 2004. Compare this to 2008, when 59% said high gasoline prices would dissuade them from spending for the holiday, a high for the survey.

“With more Americans planning to travel this Independence Day, gas prices are far less of a factor than they were in previous years,” said Pam Goodfellow, consumer insights director of Prosper Insights & Analytics, Worthington, Ohio.

The survey of 7,258 consumers was conducted June 5-13. For full results, click here.