Historically low fuel costs should mean big savings for holiday travelers this Labor Day weekend whether they’re driving or flying—which also means that everyone and their neighbor will likely be hitting the road.
According to AAA, U.S. drivers are on pace to pay the lowest prices for gas this Labor Day than they have since 2004, with the current national average price for a gallon of regular unleaded gasoline at $2.46. That's almost a whole dollar less than the average price last Labor Day, when AAA said 35 million Americans would travel at least 50 miles from their homes for the long weekend and that most of them would be driving. Meanwhile, cheaper fuel is also resulting in cheaper airline tickets, with travel website Orbitz saying recently that Labor Day weekend airfares are down 11% on average this year compared with 2014.
Given the much-cheaper fuel prices, it's not surprising that AAA predicts even more jam-packed roads this holiday weekend, when 35.5 million Americans are expected to travel, making it the highest national travel volume for the holiday weekend since the depths of the recession, in 2008.
"Barring any major supply disruptions consumers remain poised to pay the lowest national average for the holiday weekend in 11 years," AAA said on Monday. In addition to the cheaper fuel costs, AAA noted, the increase in travelers will also come as a result of the improving labor market and increased disposable income making it easier for Americans to decide to travel for the holiday.
The drop in travel costs comes as global oil prices continue to sink due to a worldwide oversupply of crude oil that easily outpaces demand (along with global market concerns over China's struggling economy that have weighed down commodity prices in general). Even with a brief recent surge, the price of crude is less than half of what it was at this time last year. Global oil prices are easily under $50 per barrel and were recently at their lowest levels in more than six years.
Falling oil prices have had an obvious effect on what Americans are asked to pay at the pump. While some Midwest refinery outages caused a brief spike in gas prices in some areas in early August, the average price per gallon of regular gas is now about 20 cents lower than it was just a month ago. While drivers in Alaska are still paying around $3.40 for a gallon of regular gas, prices at the pump are near $2 per gallon in Alabama, South Carolina, and Mississippi.
With cheap flights and Labor Day gas prices at their lowest levels in more than a decade, many people will certainly feel the temptation to pack up and hit the road this weekend. But, for those who would rather avoid the buzz-kills of traffic jams and long airport lines, the more relaxing (and still cost-effective) option might be to fire up the barbecue and hang out in the backyard.