Driving Season Kickoff Lackluster at Best, High Fuel Prices Dim Summer Outlook
Preliminary OPIS data for the Memorial Day weekend show same-store fuel volume fell year over year, and interviews with large, multistate fuel distributors and chain retailers indicate volumes ranged from flat to 5% off.
With the sharp fuel price spikes that have followed the Middle East conflict, some marketers said they were surprised fuel volume was as good as it was.
In the eastern half of the U.S., some retailers blamed rainy weather more than soaring prices for a dip in fuel volume. Others said high airfares may have encouraged more travelers to drive over the holiday weekend. Recent Energy Information Administration data show that U.S. jet fuel demand has weakened.
A Tennessee retailer said fuel volume fell 5% and inside sales declined 4% year over year.
“We were adversely impacted by rain all three days, so no boating or many ball games,” he said.
According to OPIS, average station volume declined 7.7% year over year for the week ending May 23. The average station retailed 14,704 gal, down from 15,939 gal last year.
“Monthly year on year demand declines in the U.S. had been either side of 3%, but March, April and most of May are 5.5-6%,” reported OPIS Chief Analyst Denton Cinquegrana. “I suspect that Memorial Day demand was solid, but with the national average still near $4.50, I think now you will see demand slow after the holiday weekend.”
Marketers said high fuel prices are altering purchasing patterns:
–Some report lower-than-average fuel transactions.
–A retailer in the Carolinas said average inside transactions were lower than normal, primarily on premium branded products.
–An executive of a multi-state fuel distributor in the West said fuel volume tends to increase a bit at the end of the week or the end of the month when people typically get paid.
“Traffic in Los Angeles in general is reduced. People are not going out as much. Everyone is struggling,” said a multi-brand marketer who sells fuel across several western states.
A Texas retailer said he was “fairly happy” with sales on Memorial Day. But he added that fuel demand continues to be “modest” despite population growth in the Dallas-Fort Worth metro area and surrounding markets.
For summer, “our expectations are a modest decline versus 2025 – maybe 2-5% per location,” he said.
OPIS estimates high fuel prices will continue through the driving season, even if the Middle East conflict ends soon. At a conference this week, Cinquegrana said gasoline will not return to pre-war prices of around $2.98 until next year.
Consumers Pinched by Fuel Prices
Though consumer surveys suggest some Americans are determined to hit the road this summer, the Deloitte Summer Travel Survey depicts a dim forecast.
“This summer, sticker shock is sidelining some travelers, while others are determined to get away even if it means digging deep into their pockets,” the advisory firm said.
“General affordability is a major concern for non-travelers, but a growing number of those staying home specifically highlight the high cost of travel. Also compounding matters somewhat are creeping concerns about safety and trip disruptions.”
According to Deloitte’s survey of 4,003 Americans from April 2 to April 9, 45% of respondents plan to take summer vacations with stays in paid lodging, a six-year low.
Most consumers are cutting back, especially the low-income segment.
“If perceptions of high household costs persist beyond the summer season, travel demand could face ongoing challenges,” Deloitte said.
About 51% of Americans with income less than $100,000 say their travel budget is one of the first things they cut when costs increase. About a third of respondents with incomes between $100,000 and $199,000 and about a quarter of those with incomes of $200,000 or more agreed.
“Gas prices are the pressure point,” research firm Morning Consult said after a consumer survey. “Seventy percent of U.S. adults cite rising gas prices as the highest-rated summer travel concern — well above budget worries — and 53% say gas has already led them to scale back trips. The squeeze falls hardest on lower- and middle-income households.”
Travel Plans Change
In its report on this year’s summer travel, online travel platform Expedia Group observed that higher costs are changing travel plans. Demand for domestic travel is dominating summer plans, with social conversation on domestic vacations doubling in the U.S. About 63% of U.S. travelers plan a domestic trip.
“This summer, travel isn’t slowing down — it’s being reshaped,” said Melanie Fish, vice president, global public relations, Expedia Group. “As major global events and rising costs influence decisions, travelers are either staying closer to home or seeking out destinations where they can get more for their money.”
Fuel marketers said they are promoting special deals to generate traffic, particularly to loyalty club customers. Based on a Harris poll for NerdWallet, that’s a good move.
About 89% of summer travelers will look for ways to save money on their vacation, and about a third of respondents said they will use rewards or credit card points to help cover travel expenses.
Maverik, a large convenience store chain, for example, has launched a 15cts/gal summer fuel discount for Maverik Adventure Club members when they use the Maverik mobile app to pay for purchases. The discount took effect May 12 and lasts through Labor Day.
Casey’s is promoting free frozen drinks on “Frostbite Fridays” to Casey’s Rewards customers, as well as a “Scratch, Match and Win” game. The game offers the chance to win snacks and drinks over the summer.
Reporting by Donna Harris, dharris@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com