Travel to be down Labor Day weekend

By Lauren Radomski (Contact) | The Daily Journal

Published Thursday, August 28, 2008

Fewer Americans will take to the roads this Labor Day weekend as gas prices discourage travel and Tropical Storm Gustav threatens oil operations along the Gulf Coast.

That’s the word from AAA, which predicts this weekend will be the third consecutive travel period with a year-to-year decline in travelers. Roughly 34 million people will travel over the weekend, 83 percent of them in automobiles, according to a AAA press release. This number is down nearly 1 percent from Labor Day weekend 2007.

Locally, some of the lowest gas prices in the state Wednesday were just outside Otter Tail County. Casey’s and Food and Fuel along State Highway 34 in Detroit Lakes posted $3.48 for a gallon of regular Wednesday afternoon, according to MinnesotaGasPrices.com, just above prices at stations in Moorhead ($3.46) and Dilworth ($3.47).

So why did the price of regular hover around $3.59 a gallon in Fergus Falls the same day?

“It all depends on the distribution network,” said Gail Weinholzer, director of public relations for AAA in Minnesota and Iowa.

The station’s fuel supplier makes the difference, she said, and whether the company charges customers what it paid for the fuel or what it expects it will pay for the fuel in the future.

AAA reports the current Minnesota unleaded average at $3.63.

The U.S. government’s Energy Information Administration (EIA) predicts both gas prices and vehicle miles traveled will decline through the rest of the year and into 2009, though next year’s retail regular grade prices are still expected to average $3.85 a gallon.

According to data from the U.S. Department of Transportation, the number of miles Americans traveled in their vehicles was down by nearly 3 percent in the first six months of 2008, compared to the same time period in 2007. The combination of high prices and the economic slowdown will continue to result in fewer vehicle miles traveled, the EIA says.

Gas prices over the Labor Day weekend will depend on the severity of Tropical Storm Gustav, a system the National Hurricane Center in Miami predicts will be a category 3 hurricane by the time it reaches the Gulf of Mexico. Oil companies including Royal Dutch Shell PLC have already begun to evacuate off-shore operations, according to The Associated Press, and oil prices hit over $119 a gallon in Wednesday trading.

Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Illinois, said a big threat was to oil refineries dotting the Gulf Coast from Texas to Louisiana. A shutdown in refining there would likely lead to a sudden jump in retail gas prices as soon as this weekend.

“There’s a strong chance that by Friday we could see some fairly significant pump price increases,” Ritterbusch said. “Crude can be replaced and brought in via tanker, but bringing a damaged refinery back up again can take a long time, as we saw with Katrina and Rita.”

The Associated Press contributed to this report.