0

Gas prices fall as travel grows

Photo by Steven Senne

Photo by Steven Senne

Retail gasoline prices headed downward to begin one of the country's busiest travel weeks, with more than 33 million people expected to hit the road for the Thanksgiving holiday.

Americans are still remaining closer to home because of anxiety about the economy and demand for gasoline is weaker now than it was last year at this time.

That is telling because a gallon of gasoline then cost only $1.93 as the economic crisis unfolded in 2008.

Unlike last year, however, gas is not falling sharply and though prices fell overnight, it still cost $2.64 per gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Crude prices have remained relatively strong, which has helped keep prices gas prices well above $2.50 this year.

A survey by the AAA this weekend found that the number of Americans traveling away from home for Thanksgiving will be up just 2.1 percent this year from 2008.

Oil prices jumped to begin the week and higher crude prices are one of the reasons why gasoline prices are at current levels.

Benchmark crude for December delivery gained $2.05 to $79.52 a barrel on the New York Mercantile Exchange on a weakening dollar and surprising housing data.

The National Association of Realtors said home sales rose 10.1 percent in October. That is the highest level in more than two years and helped push crude prices higher on expectations of increased demand.

Still, crude in storage is above normal levels for this time of year and it is the dollar that been the biggest driver behind rising oil prices.

Investors holding stronger currencies can buy more dollar-based crude when the U.S. currency falls. But the refiners that turn crude into gasoline, jet fuel and diesel are cutting back because demand is so weak.

Valero Energy became the latest to shut down a refinery Friday, the largest U.S. facility shut down so far this year.

That follows other refiners like Sunoco and Western Refining, who have shut down plants in recent months and off almost 1,000 workers.

Refiners said they can't raise the price of gasoline and jet fuel because people aren't traveling as much, but they must pay higher prices for crude because of the weak dollar.

Air travel is projected to decline 6.7 percent, or 2.3 million travelers this year compared to 2.5 million in 2008.

In other Nymex trading, heating oil rose 5.5 cents to $2.03 a gallon. Gasoline for December delivery gained 5 cents to $2.03 a gallon. Natural gas for December delivery rose 9 cents to $4.515 per 1,000 cubic feet.

In London, Brent crude for January delivery rose $1.96 to $79.16 on the ICE Futures exchange.