By Meagan Clark - Fourth of July gasoline prices will be the highest in six years, but that’s not keeping drivers off the road.
Despite paying 15 to 20 cents more per gallon than expected, 34.8 million Americans will drive 50 miles or more over the holiday weekend, the highest number since the financial crisis began in 2007 and 5 million more than on Memorial Day, automobile club AAA predicts. AAA defines the holiday travel period as July 2 to July 6.
“With school out for summer, the Fourth of July holiday is typically the busiest summer travel holiday,” AAA’s chief operating officer, Marshall Doney, said in a statement. “Steady improvement in the economy has spurred increased consumer confidence and spending.”
U.S. employers added more jobs than expected in June, marking the fifth consecutive month with significant job gains, the first time that's occurred since January 2000. However, wages have only increased 2 percent over the past year. The recent rise in consumer spending is due to Americans’ willingness to “take on credit card debt, not an increase in income,” according to AAA’s Independence Day Travel Forecast.
The national average gas price on Thursday was $3.67, 19 cents higher than this time last year and $1.05 higher than 2009. Gas prices have largely fallen since 2008. On July 4, 2008, the national average gas price hit $4.10.
Gas prices usually decline between Memorial Day and Fourth of July, but this year prices rose because the conflict in Iraq pushed up crude oil prices. In recent days, oil prices have fallen slightly, but the change won’t trickle into gas prices for a few weeks. By Labor Day, gas prices will likely fall by 7 to 12 cents per gallon, according to GasBuddy.com oil analyst Tom Kloza.
Crude oil prices account for 65 percent of the gasoline price, according to federal energy data. Refining the oil, which requires purchasing U.S. and foreign oil, accounts for 13 percent of the gas price, transport and marketing accounts for 11 percent, and taxes, which vary state-by-state, account for about 12 percent of the gas price.
Drivers in California, Washington, Hawaii and Alaska are paying more than $4 per gallon, while drivers in South Carolina, Alabama, Mississippi and Arkansas are paying less than $3.50 per gallon. Strict regulations on gasoline drive up prices in western states, while states with large refining capacity and with low populations demanding gasoline enjoy lower prices. And gas prices would be even higher if not for an expanding U.S. oil and refinery industry.