Memorial Day weekend marks the beginning of “summer driving season.” Families pack up their cars or minivans to visit relatives and friends. Or they hop on America’s highways to enjoy our national parks, forests, beaches, and cities. The car trip is as American as apple pie or baseball.
This summer, however, Americans’ car trips are going to be much more expensive. Gasoline prices are nearly a dollar per gallon more than last year—a one-third leap. These higher prices are directly related to higher oil prices, which are $23 per barrel more than one year ago. This is a 33 percent hike.
Adding insult to injury, a significant portion of the gasoline price increase is due to speculators exploiting fears about the impact of instability in the Persian Gulf on the future price of oil. Reliable evidence indicates that speculators prey on these fears by bidding up oil prices, which ultimately hit $114 per barrel a month ago.
Oil prices have declined from this peak, thankfully. But gasoline prices remain relatively high at a nationwide average of $3.90 per gallon, with higher prices in California, the East Coast, and major cities.
These prices mean that Memorial Day weekend travelers will spend an average of $23 more at the pump. They’ll have fewer dollars for boat rentals, picnics, baseball games, or other vacation activities. And these prices are likely to remain high throughout the summer, according to the Energy Information Administration.
While these families pay more, Big Oil earns more profits and collects tax dollars, too. That’s the fiscal equivalent of a giant rainstorm on your Memorial Day BBQ.
Here is a by-the-numbers examination of what speculators and Big Oil will cost us this weekend.
An expensive holiday weekend ahead
- 792 miles: Average distance Americans will travel this Memorial Day weekend.
- $27: The estimated oil-price-per-barrel increase due to speculation.
- 67.5 cents: The estimated increase in gasoline price per gallon due to speculation.
- $23: Additional gasoline expenditure for average Memorial Day trip due to speculation.
- 24: Number of quarter-pound hamburgers with buns for a Memorial Day picnic you can buy for $23.
Speculators drive up oil prices
- $100.72: Price per barrel of oil on May 25, 2011.
- $60-$70: Price of oil per barrel without speculation according to May 12 Senate testimony by Exxon Mobil CEO Rex Tillerson (C-SPAN, at 1:35:35).
House budget helps speculators
- $202 million: Fiscal year 2011 funding for the Commodity Futures Trading Commission, or CFTC, the independent agency that polices commodity markets for excessive speculation.
- $112 million: Fiscal year 2012 CFTC funding under the House-passed budget, H. Con. Res. 34.
- 45 percent: The proportion cut in the CFTC budget under H. Con. Res. 34.
- 2008: The last year that CFTC funding was $112 million.
- $50 million: Amount speculators made in an oil price market scam in 2008 according to CFTC charges.
- $40 billion: Big Oil tax loopholes from 2011 to 2021 that are left intact by H. Con. Res. 34.
Potential future oil savings from more fuel-efficient cars
- 60-plus miles per gallon: Scientists and engineers’ recommended average fuel economy standard for cars and light trucks built in 2025.
- $513: American family’s average savings on summer gasoline expenditures with a 60-plus mpg fuel economy standard compared to today’s vehicles.
- $67 billion: Nationwide summer gasoline savings for Americans if we had a 60-plus mpg fuel economy standard.
- 405 million: Barrels of oil that could be saved this summer with a 60-plus mpg fuel economy standard.
Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy and Valeri Vasquez is a Special Assistant at American Progress. Thanks to Stewart Boss, intern at the Center for American Progress.
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Daniel J. Weiss