US Holiday Road Trips Expected to Hit Record as Gas Prices Crater
TL;DR
Record holiday road trips expected as gas prices hit lows, with 109.5 million Americans driving and prices below $3/gallon. Lower crude costs and winter fuel blends drive the decline, though EV adoption limits gasoline demand growth.
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A record number of Americans are expected to hit the road over the December holiday period as gas prices slide to lows not seen since the pandemic.
About 109.5 million Americans are projected to drive 50 miles (80 kilometers) or more from home from Dec. 20 to New Year’s Day, representing a 2.2% increase from a year earlier, the American Automobile Association said. Some 8 million are projected to fly over that period as well, up 2.3% from 2024.
But driving is by far the preference this year, with roughly 89% of US travelers predicted to get behind the wheel this holiday season. The cost to pump a gallon of gas has sunk below the $3 mark for the first time in over four years, according to AAA data. In some states, like Texas and Arkansas, gas prices are nearing a low of $2.50 a gallon. On the West Coast, however, pump prices regularly exceed $4.00 a gallon, boosting the national average.
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Though it’s typical for fuel prices to fall in the winter because of both lower demand and a switch to a cheaper winter-blend fuel, the decline is being accelerated by a drop in crude prices as the industry braces for a glut. Ongoing peace talks between Russia and Ukraine also stand to sap a major risk premium out of the market. US benchmark futures are down roughly 18% this year.
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US consumers, meanwhile, have been signaling more caution about their personal finances amid ongoing inflation and worries about the labor market. The expected record number of drivers this holiday season comes as a round-trip domestic flight is 7% more expensive this year, averaging nearly $900 a ticket, according to AAA data.
Gas prices, however, could fall further.
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“Prices are likely to continue edging lower into January as oil prices remain in check and as US refinery runs ramp up this month from seasonal maintenance, meaning higher gasoline supply,” said Matt Smith, Americas lead oil analyst at Kpler.
Still, electric vehicle adoption and increasing internal combustion engine efficiency have meant that record driving numbers no longer translate to a comparable boost in gasoline demand. This summer, Americans drove more than they have ever done in history, according to Federal Reserve Bank of St Louis data. But gasoline demand largely remained below prior-year levels.