Consumers are reaping the benefits of the recent steady decline in gas prices as South Dakotans enter the middle of the summer driving season. AAA predicts that lower gas prices will help motivate a record 42.3 million Americans to journey 50 miles or more from home during the Independence Day holiday weekend, a 4.9 percent increase over the 40.3 million people who traveled last year.
The expected 2012 Independence Day holiday travel volume will tie the past decade's previous high mark set in 2007 and represents a near 42 percent increase from 2009.
AAA projects 128,700 South Dakotans will travel over the holiday, a five percent increase over last year's holiday period. Eighty-nine percent of South Dakota travelers will be getting there by private motor vehicle (up four percent over July 4, 2011), five percent by air (a ten percent jump over one year ago), and six percent by other means, such as bus or train.
Concern about the global economy, particularly the sovereign debt crisis in Europe and a slowdown in growth in large emerging market economies such as Brazil, India, and China, continues to act as a drag on expectations for future oil demand, putting downward pressure on prices.
The Federal Reserve Board of Governors last week decided against an additional round of quantitative easing, which has helped boost the value of the dollar. The central bank also revised downward its short and medium-term projections of both inflation and economic growth, adding additional strength to the dollar as well as reducing demand expectations. A stronger dollar relative to other currencies reduces oil prices in the U.S., as oil is traded in dollars.
While prices are lower this week, they continue to reflect an implicit risk premium associated with geopolitical instability in the Middle East and North Africa. Traders continue to be concerned about potential supply disruptions should the violence in Syria spread to neighboring countries, or should the political transitions in Egypt or Libya impact the global supply chain.
Today's national average price for a gallon of regular self-serve gasoline is $3.40 This is ten cents cheaper than the price one week ago, 25 cents cheaper than one month ago, 18 cents cheaper than one year ago, and 54 cents cheaper than the year-to-date peak price of $3.94 in early April. The national average price at the pump has now dropped 14 days in a row and 69 of the previous 71 days. The nationwide average price has not been this low since January 27, 2012, almost five months ago.
South Dakota's least expensive gasoline today is found once again in North Sioux City, where the citywide average is $3.272 for regular self-serve. The state's most expensive gasoline is in Pine Ridge at $3.899.