Millions are gearing up to travel for turkey day, even as several storms forecast across the U.S. threaten to shake up plans. AAA predicts record-breaking numbers this holiday season, topping last year’s traveller count by 1.7 million. Cheaper gas prices are at least one factor driving the increase.
Matt Smith, energy analyst for Kpler, spoke with Texas Standard about what’s behind the cheap gas and what travelers can expect this holiday season. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: So give us give us the news here. What about those gasoline prices? How are they looking as folks head out to the highway?
Matt Smith: Well, we’re in great shape, to be honest.
You know, we’re around $70 for oil prices right now, which is equating to $3 on the national average at the pump. And so that’s fantastic.
Even better news for Texas, right? Because it’s typically lower than the national average by about $0.35, $0.40. And that’s exactly what it is right now – $2.65.
So really, all in all the pump is primed for people to be doing some road tripping this Thanksgiving.
So lots of road tripping expected. What are you hearing from the experts? Are they saying that the roads are going to be rather congested?
Yeah. So AAA is projecting 80 million travelers will head 50 miles or more over the Thanksgiving break here. And some 90% of those 71 million travelers will be road tripping. So they’ll be in their cars. That is actually surpassing the record set in 2019 and 1.3 million more than last year.
So as you mentioned, there’s going to be some bad weather and that may deter some at the last minute. But otherwise, it looks like we’re going to have a banner Thanksgiving for traveling.
Let’s shift our view to the skies. What about air travel? What are you hearing on that front?
It’s again, the same. It’s forecasting record volumes here. TSA is expecting record volume of people. AAA is saying 6 million people are going to be traveling by plane. And so, again, that’s up 11% versus 2019 there.
And plane tickets are actually more expensive than they were last year for domestic flights. Apparently international flights are cheaper. But like, you know, that’s only for those lucky people that are able to jet off abroad.
Let’s talk a little bit more about these record numbers. I mean, is there anything that you have seen that accounts for these record numbers, especially as a lot of people feel the pinch from inflation? And we heard a lot about that certainly over the past several months.
Absolutely. And actually, AAA’s attributing these record numbers to economic growth – declining inflation and strong income gains, which I kind of question, too. But it really comes down to prices at the pump, it would seem, right as we’re around that $3/gallon level on the national average. And so that’s going to incentivize people to drive.
One interesting point, though, is that diesel prices right now are much lower than they were this time last year. Gasoline is as well, but only by sort of $0.10, $0.20. Diesel is down $0.65, $0.70.
So that is actually good for the cost of our goods because they’re cheaper to move around. So that’s perhaps hinting at easing inflation, but lower gas prices, more miles, it seems here.
I’m scratching my head because I think about all the international tension right now. On the surface, you would think that that would cause prices to increase. I mean, people are sort of hedging their bets about the availability of energy and fuel as we head into very uncertain times.
No, exactly. But that price of oil is hanging around that $70 level. So as long as that remains around there, then we could see prices at the pump drop below the $3 level on the national average. So we’re super close. And so seasonality will kind of just edge it lower and so we could drop below that.
But to your point, we’ve seen so much of this year where lower oil prices have been coming through and then suddenly they’re scuppered by geopolitical tension in the Middle East. So that’s still the wildcard here.
We’ve heard about what’s going on in Ukraine, of course. Maybe there’s some kind of stability on that front. But the Middle East does continue to be very unsettled. What’s the scenario that people are most concerned about there?
We still have the tit-for-tat in the background here between Israel and Iran. And so if that were to develop to the point where Israel hits Iranian oil infrastructure, that causes prices to rise because we’re taking supply out of the market.
So that’s why there is this underlying concern and hesitancy to sell off too much lower from here, in terms of prices.
