LOS ANGELES, May 8 (UPI) -- U.S. gasoline prices most likely will hit record highs this summer as the economy remains robust enough to support another busy vacation season and some Americans indicate prices would have to nearly double to keep them at home.
Indications thus far are that U.S. consumers, backed by a still-healthy economy, are putting up with $3-plus per gallon fuel and have not yet reached the point that a significant number of vacation plans will be scuttled due to sticker shock at the pumps.
A survey of owners of fuel-thirsty recreational vehicles for Nationwide Insurance revealed many consumers are willing to pay more out of pocket to get themselves and their families out of the house.
"In fact, enthusiasts say gas would have to cost nearly twice as much before they would stop using their vehicles," said Nationwide Mutual Insurance's Mitch Roggemann, whose firm surveyed owners of gallon-guzzling RVs as well as motorcycles, travel trailers and motor boats. "This is reflective of the fact that close to 70 percent of all (owners) use time spent on their vehicles as an escape from everyday life."
A temporary escape will also cause a temporary dent in wallet. The AAA national average price for a gallon of regular gasoline reached $3.07 over the weekend, leaving in the dust the U.S. Energy Information Administration's earlier prediction that prices would peak at $2.87 per gallon in May.
The bigger increases were blamed in large part on planned maintenance shutdowns and unplanned glitches at various U.S. refineries, plus expectations that gasoline demand will surge in the coming months.
"This is the fourth year in a row that gas prices have set new record highs in May," said Carol Thorpe, a spokeswoman for the Auto Club of Southern California. "About the only comfort that motorists can take from history is that prices generally have dropped every summer after reaching their record prices in May."
The EIA predicted that the refinery situation and pump prices would both stabilize ahead of Memorial Day, and merchants gamely declared that tourists wouldn't let an additional $20 or so in gasoline costs deter them from a long-awaited trip up North, down South, out West, back East -- or some other direction.
Spring surveys, however, have produced mixed signals as to whether summer driving season would be a boom or a bust this year. The unscientific conclusion is that the vacation season will be a busy one, though consumers are getting closer to the point gasoline costs could at least start curtailing driving distances.
One survey, released May 2 by the Civil Society Institute, found 72 percent of 1,013 adult Americans polled expected gasoline to top out at $3.50 per gallon this summer and 51 percent would "probably" or "definitely" cut back on vacation travel either this summer or looking ahead, during the Christmas holiday season.
"The findings about expected cuts in summer and end-of-year travel plans, as well as the expectation of reductions in general consumer spending, must be viewed with real concern," said Graham Hueber, a senior researcher with Opinion Research Corp., which conducted the poll. "Clearly, the idea that Americans are just going to accept higher gasoline prices with no real reaction does not appear to be well founded."
But leading the bulls was Nationwide Mutual's survey of 2,518 so-called power sports drivers. The survey found RV owners expecting to drive more than 800 miles each time their rolling homes hit the highway, and some respondents said gasoline would have to top $4 per gallon before they would give up their plans for a fun summer.
"Our second annual survey demonstrates that 'power sport' owners are adapting to a range of fuel prices," Roggemann said.
Roggemann hit on the key intangible of summer driving season, which makes a vacation a personal choice dictated by desire and disposable income rather than necessity. The bottom line is that as long as consumers have enough money to scratch their travel itch, the price of filling up the gas tank likely will not deter them.
Slower job growth and consumer spending could cut into the EIA's projected 1.5-percent increase in gasoline demand in 2007. Economists will be watching various consumer confidence and spending indicators for signs that a slowdown will cut into gasoline demand, although that probably would not happen soon enough to ruin the summer driving season for either the oil industry or people who just need to get away for a while.
--
(Comments to [email protected])
