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May 19, 2022 12:37 PM, EDT

Gas Price Records Mount as Travel Nears Pre-COVID Norms

Fuel prices at a gas station in New York May 17Fuel prices at a gas station in New York May 17. (Stephanie Keith/Bloomberg News)

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Gasoline prices in the U.S. have hit fresh peaks for the past 10 days, the longest run of consecutive records just as travel is expected to approach levels seen before the pandemic, according to auto club AAA.

The record rally has sent the average national retail gasoline price to $4.59 a gallon. But expensive fuel is unlikely to end anytime soon. As many as 39.2 million people are expected to travel this Memorial Day weekend, an 8.3% increase from 2021 and almost in line with 2017 levels, AAA said, no doubt putting a further squeeze on already-low supplies. Around 3 million will fly during the holiday weekend, accounting for 7.7% of total travelers, a percentage that surpasses 2019 levels, according to the report.

Expectations of strong travel volumes attest to more than two years of pent-up demand, as well as the fact that while absolute prices are high, gasoline expenditures as a percentage of income are only slightly above the average since 2015. More notably, outlays are below the average when oil prices were last over $100 a barrel. Regardless, compounded by high costs for everything else — hotels, airfares, food — it will be an expensive summer for most whether or not they choose to travel.

Trendline of gas prices

“People are overdue for a vacation and they are looking to catch up on some much-needed R&R in the coming months,” said Paula Twidale, senior vice president of AAA travel.

High pump prices are likely to persist given the recent strength in gasoline futures markets. Although futures softened earlier this week as oil dipped, retail prices are likely to stay high for the short term as gas station owners typically absorb some losses when wholesale prices rise and recoup when prices fall. In the longer term, a lack of means to substantially boost gasoline supply in the face of strong summer demand has led JPMorgan Chase & Co. to forecast pump prices of $6.20 a gallon by August.

Memorial Day, which lands on May 30 this year, is typically considered the start of the peak summer travel season in the U.S..

“Summer travel isn’t just heating up, it will be on fire,” Twidale said.

—With assistance from Sophie Caronello.

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