Fuel Prices Reshape Summer Travel Choices

Rising fuel costs are set to weigh on the US summer travel season, as motorists face sharp price increases linked to supply disruption from the war with Iran and the effective closure of the Strait of Hormuz. The pressure comes as Memorial Day weekend opens the main driving period, with a record 39.1 million people expected to travel by car.

Retail petrol prices have climbed by more than $1.50 per gallon since late February, an increase of about 45%. Crude oil prices have also surged, reflecting the Strait of Hormuz’s role as a key trade route for roughly 20% of global oil consumption. The result is a travel market in which demand remains visible, but household budgets are under greater strain.

The financial impact is already changing behaviour. A GasBuddy survey found that 56% of Americans plan to drive more than two hours this summer, down from 69% last year. Cost has become the dominant travel consideration, with 67% saying petrol prices are directly affecting their driving plans and 36% saying higher costs are causing them to take fewer road trips.

Supply conditions are adding to the uncertainty. US petrol inventories have fallen for 14 consecutive weeks and dropped by 1.5 million barrels last week to 214.2 million barrels. Analysts also warned that refinery outages, the approaching Atlantic hurricane season and tightening global inventories could add further upward pressure to prices.

The unresolved issue is whether high fuel costs merely shorten journeys or materially soften travel demand. Petrol consumption has remained relatively strong, but if restrictions through the Strait of Hormuz persist, forecasts suggest prices could exceed $5 per gallon, turning summer travel from a question of appetite into one of affordability.