Traditionally, the Thanksgiving holiday is one of the most-traveled times of the year in the United States, and much of that travel is by gasoline-fueled light-duty vehicles (passenger cars and light duty trucks).
AAA estimates that during this Thanksgiving holiday period (November 25-29), 41.9 million people in the United States will travel more than 50 miles from home by car. This is a slight increase of 0.7% compared with last year, and the highest number of travelers by car for Thanksgiving since 2007.
This year, gasoline prices have fallen to the lowest levels for Thanksgiving week since 2008, with the U.S. average regular retail gasoline price at $2.09 per gallon (/g) as of November 23, 73 cents lower than the same time last year (Figure 1).
Click Image to Enlarge
Gasoline prices across the country reflect differences in gasoline specifications, taxes, and the characteristics of regional market supply and demand balances. In 2015, regional supply disruptions in California and in the Midwest resulted in higher wholesale and retail gasoline prices in the affected markets.
Based on data from EIA’s Gasoline and Diesel Fuel Update, retail gasoline prices as of November 23 range, from a low of $1.85/g in Petroleum Administration for Defense District (PADD) 3 to a high of $2.58/g in PADD 5 (Figure 2).
Click Image to Enlarge
Lower gasoline prices across the country translate into cost savings during Thanksgiving travel, but those savings, like gasoline prices, vary by region (Figure 3).
Estimated trip savings can be calculated using the average light-duty vehicle fleet fuel efficiency of 22.3 miles per gallon in 2014 and 22.6 miles per gallon in 2015, with AAA’s 50-mile (100-mile roundtrip) distance traveled, and the regional average retail regular gasoline price for Thanksgiving week of each year.
The region with the greatest travel savings compared to last year was the Rocky Mountains (PADD 4), where the average retail price of regular gasoline is 84 cents lower than the Thanksgiving week of last year, saving an estimated $3.93 on the 100-mile round trip, falling to $9.25 from $13.18.
The region with the lowest price change compared to last year is PADD 5, where a 100-mile round trip costs $2.30 less compared to last year. However, trip savings using the PADD 5 except California average price is $3.15, highlighting the price effect of California’s ongoing supply disruption (Figure 3).
Click Image to Enlarge
Lower gasoline prices this year are linked to lower crude oil prices. As global petroleum and other liquids production continued to outpace consumption in 2015, the resulting increases in global inventories of crude oil and petroleum products have put significant downward pressure on oil prices.
The decline in crude oil prices also reflects concerns about lower economic growth in emerging markets, a negative factor for demand growth and expectations of higher crude oil exports from Iran. Spot prices of North Sea Brent fell to $42 per barrel (b) in the third week of November, $37/b lower than the $79/b average during November 2014.
Additionally, higher inventories and refineries returning from fall planned outages will likely weigh on wholesale and retail gasoline prices going forward. Total U.S. gasoline inventories were 216 million barrels for the week ending November 20, 10 million barrels higher than the same time last year, and 9 million barrels higher than the five-year average.
Refineries returning from fall maintenance have pressured gasoline prices further, particularly in the Midwest (PADD 2), where wholesale gasoline prices in Chicago briefly fell below $1.00/g last week. However, the lower wholesale prices will take time to pass through to the retail level.
