Fourth of July revelers have another reason to enjoy their time off this weekend. Gas prices are falling just in time for the Fourth of July weekend.
That should come as some relief to the millions of Americans expected to crisscross the country in commemoration of Independence Day. Whether the savings last depends on the future of unrest in the Middle East and the intensity of hurricane season.
"If we see some price spikes, it will be because of hurricane season, much more than the Middle East, the dollar, or the economy," Tom Kloza, chief oil analyst for GasBuddy, a gas prices website, said in a telephone interview. "But obviously, if the economy goes down the toilet, prices for all commodities will come under pressure.
Average US gas prices dropped just a hair below $3.50 a gallon this week, according to the US Energy Information Administration (EIA). At $3.496, the average gas price is down eight cents from last week. That's still 14 cents higher than last year's Independence Day and the third highest July Fourth on record, according to Mr. Kloza.
Prices vary by region. In California, prices are just over $4.00 but in Ohio you can fill up your tank for an average of $3.23, according to the EIA. Those prices vary even more by individual locations. That's largely because the industry is increasingly going in one of two directions, according to Kloza. Fuelmakers either go for high quantities and low prices or try to differentiate their product and offer significant reward programs. The spread benefits consumers.
"If you plan your trips, you can find gas for 30 or 40 cents cheaper," Kloza said.
More than 40 million Americans will travel 50 miles or more from home during the Independence Day holiday, according to AAA. That's down 0.8 percent from last year. The majority of those travels – 84 percent – will be by automobile.
“This projection is due to the calendar effect of one fewer day in the holiday period and economic growth that is not robust enough to offset the impact of the sequester and the effect of the end of the payroll tax cut on American families,” AAA president Robert Darbelnet said in a statement.
The advancing price of oil could cast a pall on the outlook for gas prices in the medium term. Oil prices passed $98 a barrel after massive weekend protests in Egypt. The country's military has issued an ultimatum to President Mohamed Morsi to meet the demands of the millions seeking his ouster. Egypt is not a large exporter of oil, but major pipelines pass through the country and the Suez Canal is critical to the transportation of oil.