Labor Day 2008 - Gas Prices Revisited

Labor Day 2008!

You can hear the chorus everywhere. Where did the Summer go?! It's back to school time for kids and the end of Summer vacations for most. In fact the long Labor Day weekend is when families hit the road to travel to see friends, family and resort areas. But this year high gas prices have altered the plans of many and a new word invented, the "staycation". In fact high gas prices have had ripple effects throughout the American and world economy. Because of these changes I thought this would be a good time to revisit the issue of gas prices and where we stand at the end of August.

In the June 19 About Business post, "Gas Prices in the News" the average price of regular gas in Pittsfield was $4.102. The national average was $4.073. On July 17 the national average reached its highest point $4.114. Since that peak national gas prices have dropped a little over 10% to $3.682; these prices courtesy of AAA's daily Fuel Gauge Report. For Pittsfield there has been a 43 cent drop since June 19 to the current $3.674, still just over a 10% decline.

If you are traveling this Labor Day weekend, you may want to know where the lowest prices are. Which states have the "cheapest" average prices? Which cities have the "cheapest" rates? To find this information out use AAA's daily State by State averages and its Gas Price Locators. As an example I'm traveling to Connecticut from Massachusetts this weekend. Average rates in Connecticut are $3.816; Massachusetts $3.607. Pittsfield's lowest rate is $3.57; Southern Connecticut $3.82 to $3.97. This tells me I should plan my weekend gas purchases in Massachusetts. You may use these tools to plot your own purchases.

Gas prices have impacted both travel plans, how people travel, and also automobile sales. In the area of automotive sales, SUV's are languishing in dealer lots and automotive companies have launched heavy incentives to clear the lots for the introduction of 2009 models. If companies have cars with good fuel economy they are emphasizing those models. For example General Motors is touting its Chevrolet Cobalt, a car they had planned to discontinue but no more it seems. It's fuel economy is competitive. Automotive companies are downsizing their models, discontinuing many truck lines and this has been true of Japanese companies as well as they have seen their SUV and pick up truck sales decline. Labor Day is often thought as the best time to buy a new car both because of price incentives and change of models from 2008 to 2009 and this year is no exception.

CNNMoney.com has just issued a report on August automobile sales. There they report a slight rebound from the July 16 year low of 12.5 million vehicles sold. August sales are estimated at over 13 million. However this number is 3 million less vehicles sold than August 2007 sales of 16.2 million. So the automotive picture is bleak for the companies but good for buyers, who can get good bargains. Buyers have to be aware that the highest price incentive packages are for vehicles often not competitive for fuel economy. As a reminder it is the EPA that tracks fuel economy. Their guide should be looked at in the library or online if fuel economy is one of your priorities.

So increased gas prices are greatly affecting the economy and people are curtailing their plans. Back to Labor Day. What is the immediate impact for this weekend? The New York Daily News online edition of August 28 had a most interesting report by staff writer Oren Yaniv "Dropping GasPrices Signal More Travel". Yaniv makes a strong argument, using AAA/Travel Industry Association figures that people's travel plans have decline less than 1% from Labor Day 2007. But how they travel has changed. Here's AAA's estimates: 34.4 million traveling, 28.6 million by car, 4 million by air for an average distance of 888 miles and $826 in family expenditures. Labor Day appears as always to be the last fling before settling down to Fall and Winter preparations.

Generally, gas prices decline after Labor Day. This year it is increasingly difficult to predict. What will the impact of Hurricane Gustav be? Oil price per barrel is down to between $117 and $120 from highs of $147. Many towns and villages and homeowners and renters are fearful of increased energy costs for the harsh New England winters. There is the air of impending crisis for all businesses and individuals that operate on small margins.

The future will be faced with mixed feelings that come from a volatile situation. The national holiday of Labor Day at least gives people the opportunity have a release before they have to buckle down to uncertainty ahead. It's also the only time we may honor freely each other as workers.

Enjoy your holiday!