LOS ANGELES, May 23 (UPI) -- Gasoline prices hovered around $1.50 Friday as the nation unofficially launched the summer driving season that traditionally pushes up both demand for fuel and the price motorists pay at the pump.
Around 35 million Americans are expected to travel more than 50 miles from home during the three-day Memorial Day weekend, around the same number as last year although rain on the Eastern Seaboard could cut into the number of people on the road.
"Given conditions just two months ago with the United States at war and dismal consumer confidence, AAA is encouraged to see holiday travel return to 2002 levels," said AAA Wisconsin spokesman Michael Bie.
Travel on the East Coast could, however, see a drop due to a predicted period of stormy weather in the Mid-Atlantic states. While the rain will likely cut into gasoline demand, it also has merchants in the region worried that the 2003 tourist season will get off to slow start.
"This is such a weather-dependent weekend," Susan Jones, executive director of the Ocean City, Maryland Hotel-Motel-Restaurant Association, told the Washington Times.
Low fuel inventories and the pending war in Iraq had caused concerns this spring that crude prices could soar and leave Americans facing not only gasoline prices above $2 per gallon, but also the possibility of actual shortages. But the plug was pulled on prices once the war began and it became clear that Middle East oil exports would not be interrupted.
AAA's national average price for regular unleaded peaked at $1.722 per gallon on March 18 and has been on a steady decline ever since. A month ago, regular unleaded averaged $1.569. This week, prices have been largely steady at around $1.494.
There are substantial differences in the average price when seen on a state-by-state basis. Hawaii's $2.067 per gallon was the highest retail price in the nation while Georgia enjoyed the nation's lowest average of $1.319.
Prices on the East Coast and West Coast have been running $1.70-$1.90 per gallon while the Gulf Coast has been below the AAA average. While crude costs are a major factor in gasoline prices, the current trend appears to be influenced more by profits and competition at the street level.
"Wholesale gasoline prices in Texas have been edging upward and dealer profits are very thin at this time, which is a recipe for higher prices," noted AAA spokeswoman Carol Thorp. "Motorists can look for prices to start inching higher, and by this time next week, they could be 2-3 cents above their current levels."
In gas-guzzling California, AAA found that dealers were enjoying a better profit margin and had more flexibility to lower their prices.
"Customarily, the beginning of the summer driving season means higher gas prices, but that's not happening this year," Thorp said. "Gas prices have retreated more than 34 cents since their record highs two months ago. Wholesale prices appear to have bottomed out, but healthy dealer profits are spurring competition between retailers."
July crude settled 31 cents higher at $29.16 per barrel on the New York Mercantile Exchange while June gasoline -- which will be available for sale prior to the July 4 driving holiday -- futures rose 1.33 cents to 90.65 cents a gallon.