Low gas prices have prompted 2.2% more travelers to drive for the upcoming holiday weekend, spurring the most drivers since 2005.
The second highest number of drivers will travel during Memorial Day weekend with an additional 700,000 people compared to 2015 for a total of 38 million Americans driving 50 miles or more, said Julie Hall, a spokeswoman for AAA, a Heathrow, Fla.-based non-profit travel organization.
"Cheap gas prices and a better job situation than in recent years give consumers more confidence and money to use," she said. "Driving has been at record highs for much of the past year."
The Energy Information Administration, the independent statistical arm of the Department of Energy based in Washington, D.C., is also seeing a boost in driving and forecast a 2.3% increase in vehicle miles traveled for this year while GasBuddy estimates a 2.2% uptick in travel between Memorial and Labor Day, according to its survey.
The average household saved $660 in 2015 from lower fuel prices and is predicted to save $240 this year because of higher prices and a surge in driving, said Timothy Hess, a lead analyst for the EIA. Gasoline consumption increased slightly in 2015 by 3% from the previous year after a trend of flat to declining in recent years.
Memorial Day travelers will likely experience the lowest prices for this holiday weekend since 2005, he said.
"On May 23, the EIA reported the national average price for regular gasoline to be $2.30 per gallon and we expect gasoline prices to remain close to that level in the coming weeks," Hess said.
Gas prices nationally on Memorial Day will be at $2.29 per gallon, only a slight increase from $2.07 per gallon in 2005, said Patrick DeHaan, a senior petroleum analyst for GasBuddy. Prices have declined rapidly since their high of $3.66 in 2014 and even $2.75 in 2015.
Summer Price Forecast
Across the U.S., the EIA predicts prices in June to range from an average of $2.71 per gallon on the West Coast to $2.05 per gallon on the Gulf Coast.
"There can be quite a bit of variation within a region depending on state and local taxes and supply situations," Hess said.
GasBuddy estimates similar prices at the pump with a range of $2.10 to $2.40 per gallon, DeHaan said.
"California will likely see prices in the upper $2 per gallon range, while South Carolina, Texas and Oklahoma will see summer averages closer to $2 per gallon," he said.
The extra drivers on the road will push up demand and prices "typically jump" over long holiday weekends, said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business in Dallas.
"Since drivers have become accustomed to $2 gasoline, we can expect some grumbling in response to higher prices," he said. "Consumers are still getting a bargain at the pump today."
Prices were nearly double the amount of $3.70 per gallon during the summer of 2014 and rose to more than $4 per gallon in the summer of 2008.
Gasoline prices will fall after the holiday weekend because demand will decline and this year "should be no exception," Weinstein said.
Crude Oil Prices Rising
Gasoline prices are rising through a good portion of the U.S. as crude oil prices have rebounded to reach $50 a barrel, said DeHaan. The prices of crude oil may hold until OPEC's members meet on June 2 in Vienna, Austria and could either rise or decline afterwards.
Large price spikes have occurred in the Great Lakes area due to refinery maintenance which has continued and "removed a larger chunk of capacity than what we've seen the last five or even ten years" and is scheduled to wrap up in mid to late June, he said.
Although crude prices have rebounded from their record lows, they are expected to remain range bound between $40 to $50 per barrel for the remainder of 2016 because of excessive inventories, said Rob Thummel, a portfolio manager with Tortoise Capital in Leawood, Kan. which has $13.5 billion under management invested in energy stocks.
The OPEC meeting will not affect global crude prices because the group is not only becoming "less relevant," the margin for error in their production is minimal.
"Saudi oil production volumes will rise in the summer to meet local refinery demand and will garner attention, but it is normal," he said. "Any more supply outages could send prices considerably higher."
Costs for gasoline have risen in part because oil companies are switching to the government mandated summer blend which has fewer emissions, along with oil supply disruptions in Canada and Nigeria, said Chris Faulkner, CEO of Breitling Energy, a Dallas oil and gas exploration and production company.
"Refineries want to empty their gasoline stocks before switching to the new blend and use the outage window for maintenance which results in lower gasoline production," he said. "Refineries have to switch to the summer blend by June 1 which coincidentally falls right after the holiday weekend."
Since February, prices surged by 85% based on "expectations that the global crude glut is finally starting to reach its pinnacle and shrinking," Faulkner said.
A reduction in capital expenditures has seen production slashed in parts of the key shale regions in the U.S. while unexpected outages in other countries are "keeping additional barrels off the market which is lifting and supporting the price," he said.
"We see the price of oil testing $50 and breaking through in the very near term and settling in the low $50s for the rest of the year," he said. "As we look toward Nigeria, Venezuela, Libya and a ton of other countries, the threat of disruptions seems to be increasing and not decreasing and if that continues we could see WTI, the U.S. oil benchmark, surge into the high $50s and even test $60 before year end."