Memorial Day arrives with Peoria-area gas prices down $1 from last year. But a fuel market expert senses anxiety over the economy
The arrival of Memorial Day weekend generally signals the unofficial start of summer, and an increase in vacation travel.
Often, the holiday is also accompanied by a spike in gas prices. As of Friday, the GasBuddy.com and AAA Motor Club websites showed the Peoria area’s per-gallon average in the $3.55-$3.70 range – although this week some stations were as high as a tick below $4.
But fuel market analyst Patrick De Haan says Peoria’s prices have held relatively steady, and are more than a dollar lower than this time last year when the national average topped $5 and the Peoria area peaked at $4.83.
“In the lead up to Memorial Day, the gas price has been inching down,” said De Haan. “A lot of that had to do with the summer switchover that took place and refineries that were doing maintenance, some of that pressure is now beyond us.”
De Haan says he doesn’t anticipate much volatility in the price, unless something unpredictable like a major hurricane or refineries going offline results in a drop in production.
“All in all, it's going to be much more affordable summer filling your tank,” he said. “There are some events that pose upside risk to gas prices. But if we can avoid those, I think gas prices should spend the majority of the summer in Peoria and the mid to upper $3 gallon range - so within the ballpark of where we are today.”
But De Haan says U.S. consumers are concerned with the state of the economy, and the market’s direction may hinge on the federal government reaching an agreement on raising the nation’s debt ceiling.
“Americans want to hit the road, but I think there's this anxiety over the state of the U.S. economy.”Patrick De Haan, fuel market analyst
“If we default, that could push us into a recession, which could push prices down,” he said. “If there is a debt ceiling deal in time, that could also do the opposite – push the economy back to growth and potentially mean higher demand and higher prices. So as good as the economy, as go gas prices; if it's bad news for the economy, it's generally good news as the prices go down. Whereas if it's good news for the economy, it's generally bad news for gas prices, which go up.”
De Haan says the economic uncertainty has led to “fairly soft” demand for gasoline this year, but he also sees signs of optimism.
“Consumers that responded to our summer travel survey, 64% of them said that they're going to take at least one long road trip this summer. That's up six percentage points from last year,” he said. “But highlighting the economic uncertainty, of that group that said they're hitting the road, 60% of them have yet to make solid plans on doing so by booking accommodations or other plans. So Americans want to hit the road, but I think there's this anxiety over the state of the U.S. economy.”