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In less than two weeks, 33 million Americans are expected to take to the road over Labor Day weekend—the highest number in four years, according to AAA. Gasoline prices by then could be near $4 a gallon, says Stephen Schork, president of the Schork Report, which tracks global oil prices for traders and investors, but drivers don't seem to care.
"Travel is still within America's discretionary spending budget," says Bill Sutherland, VP of AAA Travel Services in a prepared statement.
[Related: Gas Prices Will Continue to Rise Until U.S. Builds More Refineries: GasBuddy Analyst]
Gasoline prices yesterday hit $3.74 a gallon—the highest level in at least 22 years, according to the Energy Information Administration. They've been climbing for seven weeks straight because crude oil prices have been surging on growing geopolitical tensions with Iran—which sits on 10% of the world's oil supply—and some key U.S. refineries have been shut down unexpectedly. As a result, gasoline inventories have fallen to levels not seen since 2008.
[Related: Relief At The Pump Hinges on Iran: Daniel Yergin]
That was a presidential election year, like this one. Gasoline prices then were only a few cents below current levels, but they were on the decline, having peaked in July as they usually do. That's not the case this year.
"It's very abnormal for Americans to be paying more for their gasoline in September than they were in July," says Schork. And that price increase, he says, is putting pressure on the White House to tap the Strategic Petroleum Reserve (SPR) in an effort to stunt the rise in oil prices. He gives 60% odds that the Administration will do just that.
The White House is reportedly considering tapping the SPR, but hasn't made any final decisions. It last considered such a move in the spring when crude oil prices were nearing $110 a barrel but scrapped the idea when prices fell. Crude oil prices are now near $97 a barrel--their highest level since May--and continue to climb with gasoline following.
[Related: Midwest Drought: Is It the Cause of Higher Gasoline Prices?]
"The US economy can't handle $4 gasoline," Schork says.
But if his forecasts are correct, it won't have to contend with them for too long.
"We will get a significant correction in oil prices," says Schork. "We just don't know if it will occur now or two months from now."
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