More drivers this summer, but below 2007 peak as gas prices rise
It's not hard to see why numbers are down since 2007. Of the 32.4 million who are leaving town this weekend, 27 million will be traveling by car. Average gas prices are hovering around $2.36 per gallon, far below last year's $3.94 per gallon; however, even this comparatively low price represents an increase of about 30 cents over the past month. For many consumers, the rapid price increases of the past couple of years are still fresh memories, and it isn't hard to imagine the cost of fuel quickly accelerating upward as May turns to June and thoughts turn to the beach.
The fears may be somewhat alarmist. Although some experts are predicting that gas will go to as high as $2.80 per gallon, most are pegging it around $2.50. Refineries are running well below capacity, which means that, should demand increase, it will be possible to keep prices relatively low. This has not, however, put a damper on gas speculation, which many analysts are arguing will be the motivating force driving prices this summer.
More importantly, consumption habits have changed. A year ago, drivers were spending approximately $1.4 billion per day on gasoline; this year, they're spending roughly $874 million. Since 2007, a combination of high gas prices and rising unemployment have taught consumers a harsh lesson in cutting spending and maximizing efficiency. Many people who once flew away for the weekend are now driving, or even staying at home. Phrases like "stay-cation" and "local tourist" have entered the vernacular as consumers are trying to keep their families -- and their dollars -- closer to home.
This tendency toward thrift has caused major repercussions in the hospitality industry, where travel agencies, theme parks, and hotels are falling over themselves to offer bargains, discounts and compelling attractions that will draw consumers out of their homes. Domestic airfares are roughly 10 percent lower than they were last year, and the average price of a hotel room has dropped 14 percent. Although bookings are up slightly from last year, it's been a hard sell for companies that specialize in tourism.
The ultimate lesson seems to be one of supply and demand. Two years ago, when wallets were flush, employment was high and credit was flowing, consumers were happy to spend thousands of dollars on elaborate vacations. Now that the economic climate has changed, the "squawk level," or point at which consumers will balk, has dropped precipitously. Ultimately, consumers have learned that they have many options for their vacations this summer, including staying home, and it will be take a lot of work for the tourism industry to convince them to fork over their disposable income to chose the more expensive ones.