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High gas prices keeping many closer to home

01:00 AM EDT on Thursday, July 3, 2008

By Timothy C. Barmann

Journal Staff Writer

The highways during the July Fourth holiday weekend will be a little less crowded this year.

At a time of near record-high gasoline prices and a shaky economy, some motorists are expected to stay home, or at least closer to home, for the annual holiday.

“Clearly, gas prices are continuing to take a toll on the traveler’s budget,” said Lloyd P. Albert, a spokesman for AAA Southern New England.

For the first time since 2000, the auto club is predicting a decline in the number of Americans traveling for the July Fourth holiday period.

The auto club estimated that 40.5 million Americans will travel between tomorrow and Sunday, compared with 41 million during last year’s holiday. That is a decline of 1.3 percent.

A poll conducted last month by Rhode Island College’s Bureau of Government Research and Services found that 59 percent of the people surveyed said they were less likely to travel by car outside of Rhode Island this summer, compared with last year’s vacation plans.

Government figures show that Americans are driving fewer miles, a decline not seen since at least 1983. And they are consuming less gasoline for the first time since 1991.

The change in driving habits has followed an unprecedented rise in fuel prices. In Rhode Island yesterday, the average price of regular, self-serve gasoline was $4.11 a gallon, an increase of $1.17, or 40 percent, over last year’s price of $2.938 a gallon, according to AAA’s Daily Fuel Gauge Report.

Yesterday’s price was less than a penny shy of the all-time record high of $4.118 a gallon, reached on June 16, AAA said.

In just over four months, gasoline has jumped $1.09 a gallon, or about 36 percent, according to the Rhode Island Office of Energy Resources.

The increases have been driven by the rising price of crude oil, from which gasoline is made. Crude oil for August delivery closed yesterday at $143.74 a barrel on the New York Mercantile Exchange, up $2.77, or 2 percent, from the closing price on Tuesday. Crude is up about 44 percent this year.

Expensive gasoline means that roads trips have become more costly. For example, a Providence family driving to and from Washington, D.C., this weekend in a car that averages 20 miles per gallon would pay about $147 in fuel costs, an increase of nearly $48 over last year.

The high cost of gasoline appears to be tempering the carefree driving habits of Americans, who have continued to buy more gas, year after year. That was, until this year.

Gasoline consumption nationwide is down 1.1 percent for the first six months of this year, according to the Energy Information Administration, part of the U.S. Department of Energy. In the most recent four-week period, consumption declined by 2.1 percent.

James L. Williams, an economist with WTRG Economics in London, Ark., said the consumption drop occurred despite the increased use of ethanol-blended fuel, which generally lowers a vehicle’s gas efficiency; and the fact that there are more drivers this year than last, thanks to a growth of 1 percent in the U.S. population.

The U.S. Department of Transportation reported last month that Americans drove 1.4 billion fewer highway miles in April 2008 compared with April 2007, a decline of 1.8 percent.

“We’re burning less fuel as energy costs change driving patterns, steer people toward more fuel efficient vehicles and encourage more to use transit,” said U.S. Transportation Secretary Mary E. Peters, in a statement last month.

Figures from the State of Rhode Island show that Rhode Islanders have cut back on their driving even more than those in other states.

For the last 11 months of fiscal year 2008, the state has recorded net gasoline tax receipts of $124.3 million, down 3.4 percent from the same period last year, and down 4.9 percent from two years ago, according to figures provided by the state Department of Revenue. (Figures for the full fiscal year, which ended June 30, are not yet available.)

The revenue is generated from a 31-cents-per-gallon tax on every gallon of gasoline sold in Rhode Island.

High gasoline prices have owners of some attractions and lodging facilities concerned. Many have begun to offer discounts to make up for the extra fuel costs.

The “gas-friendly packages” page is the most popular section of the State of New Hampshire’s tourist Web site, said Alice L. DeSouza, director of the New Hampshire Office of Travel & Tourism Development.

(The page is at www.visitnh.gov/why-new-hampshire/gas-and-green-offers/gas.aspx )

“We anticipated there was a potential for folks trying to look for greater value,” DeSouza said. “We put calls out to the industry and they responded really well.”

Some offer a fourth night’s stay for free with a three-night stay, she said. Another is providing a gift certificate for a tank of gas if you stay more than two or three nights, she said.

It’s too early to tell how gas prices will affect tourism in New Hampshire this year, DeSouza said. But the state has seen a shift in where visitors are coming from, she said. There are fewer tourists from out of state, and more people from Canada. Gasoline prices are lower in New Hampshire compared with Canada, she said. And Canadians are also attracted by New Hampshire’s lack of a sales tax.

To be sure, the highways won’t be empty this July Fourth holiday. AAA estimates that 13 percent of the U.S. population will travel this holiday weekend.

The vast majority –– 34.2 million travelers –– will go by automobile, a decrease of 1.2 percent from the 34.6 million who drove last year.

Another 4.5 million (11 percent of holiday travelers) expect to travel by airplane, a 2.3-percent decrease from 2007. The remaining 1.7 million plan to travel by train, bus or other mode of transportation, AAA Southern New England said.

Top destinations for those traveling by car are Niagara Falls, Canada; Hershey, Pa.; Montreal, Canada; Washington, D.C.; and Mystic, Conn., AAA said.

It costs more to get there
Destination

Miles (roundtrip)

20082007Extra cost
Mystic, Conn.100 $ 20.55 $ 14.69 $ 5.86
Springfield, Mass.172 $ 35.35 $ 25.27 $ 10.08
New York City364 $ 74.80 $ 53.47 $ 21.33
Hershey, Pa.684 $ 140.56 $ 100.48 $ 40.08

Montreal, Canada

718 $ 147.55 $ 105.47 $ 42.07
Washington, D.C.816$167.69$119.87 $47.82
Niagara Falls, Canada930 $ 191.12 $ 136.62 $ 54.50
The average price of gasoline was $4.11 a gallon yesterday, according to AAA, compared with $2.938 a gallon a year ago. That extra $1.17 a gallon means that the fuel for trips this holiday weekend will cost about 40 percent more than last year.
Notes: Costs based on 20 miles per gallon vehicle; mileage from Google Maps, originating from Providence

tbarmann@projo.com

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