Rising gas prices dampen consumer confidence, threatening not only travel plans but the greater economy as well.
Rising gas prices threaten not only vacation travel plans, but the overall economic recovery, according to experts who say paying more at the pump has a powerful psychological affect on American consumers.
Prices for a gallon of regular gas averaged $3.846 across the nation on Tuesday, up from $3.805 a week ago and $3.549 a year ago, according to the Daily Fuel Gauge Report published by the American Automobile Association or AAA. The national average is widely expected to reach $4 to $4.25 a gallon by Memorial Day, according to The Conference Board, which compiles the benchmark Consumer Confidence Index.
“Could an increase of five to ten dollars a week to fill up the typical family gas tank really derail the recent improvement in economic conditions?” asked The Conference Board in a recent statement. “Probably not, especially if the increase slowly diminishes between Memorial Day and Labor Day.” Not all analysts agree.
“Rising gasoline prices threaten to temper a hard-won sense of economic momentum for middle-income families in the U.S. as the election campaign heats up,” writes Mike Dorning in a recent article for Bloomberg Businessweek. “While gasoline accounted for just 3.8 percent of consumer spending in January, fuel prices have a disproportionate impact on both the psychology and actual finances of middle- and lower-income families.”
Rising fuel costs are impacting Americans’ driving, shopping and travel plans. A recent AAA poll found that 84 percent of the 1,024 respondents have altered their driving habits or lifestyle in response to the recent hike in gas prices. Most commonly, drivers are combining trips and errands to cut costs. The AAA notes in a prepared release, “Several short trips starting with a cold engine each time can use twice as much gas as a longer multipurpose trip covering the same distance when the engine is warm.”
Should prices remain at current levels, about one-third of Americans would purchase or lease a more fuel-efficient car, according to the survey results. About half the participants reports driving fewer miles and making fewer shopping trips. Forty-five percent are dining out less and one-third has delayed major purchases.
The majority of Americans have had to postpone or scale back their vacation plans in the past two years because of financial concerns, according to a survey of 1,150 investors conducted by Millionaire Corner in February. Though the vast majority – 84 percent - of survey participants do plan to take a family vacation this year, individuals with less than $100,000 are likely to take a more modest vacation. Nearly 60 say they have had to put off or cut back on their vacation plans in the past two years.
The AAA, the nation’s largest motoring and leisure travel organization, provides a free smartphone app to help drivers find the cheapest gas prices close to home or one the road. The association also provides an online mapping tool, the Trip Tik Travel Planner, to help drivers devise the shortest possible route. Other fuel-saving tips include maintaining properly inflated tires, going easy on the gas pedal and brakes, driving the speed limit, lightening the load as much as possible, not using the roof rack and keeping up with routine maintenance. According to the AAA, all can help offset rising gas prices.