Motorists on Labor Day weekend will find less traffic than last year and gasoline about a dollar cheaper, but the direction of fuel prices beyond the holiday is almost anyone's guess.
The AAA forecast Wednesday that 13 percent fewer Americans will travel 50 miles or more from home next weekend than last Labor Day, or about 39.1 million, because the holiday falls later this year, when many school-age youngsters will have resumed classes.
Normally, gasoline prices fall after Labor Day, but uncertainty this year about the strength and timing of the economic recovery and the strength of the U.S. dollar are foiling efforts to predict prices of crude oil, gasoline's main ingredient.
A stronger recovery portends an increase in fuel demand, which in turn can lead to higher prices. A weaker dollar tends to push up oil prices, because it is traded in dollars and becomes cheaper for investors with foreign currencies.
"Historically, this is the time when gasoline prices should be trending lower, and that trend should continue through September and October," said Stephen Schork, editor of The Schork Report, a trade publication based in Villanova, Pa. "But it's not happening this time. You can't make gasoline unless you have crude oil, and you're not going to see a material downtick in prices."
Regular unleaded gasoline averaged $2.881 a gallon on Long Island Wednesday, according to the AAA, unchanged in the previous week and up 13.2 cents from a month earlier. A year ago, prices were receding from the record high average of $4.346 on July 8, 2008, as crude oil soared past $147 a barrel.
At the Mobius Risk Group of Houston, a commodities advisory firm to large energy buyers, chief risk officer Paul Smith says the group foresees a weakening of the dollar in the short term, accompanied with a weakening in oil prices. "It's our expectation that crude is going to sell off a little here in the next couple of months to below $65," he said.
Crude oil futures fell for the second day in a row Wednesday, settling at $71.43 a barrel in floor trading on the New York Mercantile Exchange. They had touched $75 on Tuesday.
Schork and Brian L. Milne, refined fuels editor based in Canbury, N.J., for the Spanish energy services company Telvent DTN of Madrid, said new figures Wednesday from the U.S. Department of Energy suggest lower gasoline prices in coming weeks.
The department said in its weekly fuels report that demand for gasoline last week was down 3 percent from a year earlier, while gasoline stocks are up by 6.5 percent. "It seems that the pressure is on the market for prices to move lower," said Milne.