On the Monday before Thanksgiving, U.S. retail gasoline prices for regular-grade gasoline averaged $3.06 per gallon, only 2 cents higher than last year. More importantly, this year marks the lowest average gasoline price on this date since 2020, when pandemic-related disruptions heavily influenced gasoline demand and travel plans. As small business owners prepare for one of the busiest travel weekends of the year, these price changes hold significant implications.
The American Automobile Association (AAA) forecasts that 81.8 million Americans will travel 50 miles or more during the Thanksgiving holiday weekend, an increase of 1.6 million travelers compared to last year. With 73 million of these travelers expected to drive, gasoline prices remain a crucial consideration for small business owners in sectors such as retail, hospitality, and transportation.
Since the end of summer, gasoline prices have declined by an average of 12 cents per gallon. This drop largely correlates with falling crude oil prices, which account for about half of what consumers pay at the pump. The average Brent crude oil price stood at approximately $63.94 per barrel through November 24, marking the lowest monthly average since December 2020. For small businesses, lower fuel costs can translate into reduced operating expenses, particularly for those reliant on transportation for delivery of goods or service provision.
However, regional variations in gasoline prices can impact businesses differently. For example, West Coast prices averaged $4.07 per gallon as of November 24, reflecting an increase of 5% from last year. This rise can be attributed to limited connections with refining centers, tight local supply and demand, and higher state taxes. Conversely, the Gulf Coast—boasting more than half of the U.S. refining capacity—saw lower average prices around $2.64 per gallon. This discrepancy underscores the importance of local conditions for small business owners who may need to adjust pricing strategies or operational plans based on regional fuel costs.
"Gasoline prices are often higher in summer months when demand peaks, as well as due to the environmental regulations associated with summer-grade gasoline," said Alexander de Keyserling, the principal contributor of the report from the U.S. Energy Information Administration (EIA). Understanding these seasonal trends can help small business owners plan for expense variations throughout the year, particularly during times of increased travel, such as the Thanksgiving holiday.
The Rocky Mountain region is a notable example of logistical constraints that can influence gasoline pricing. Here, prices averaged $2.87 per gallon as of November 24, reflecting a 2% increase from the previous year. While the region has less supply and demand, challenges in distribution can complicate business operations, especially for small businesses relying on transportation.
Moreover, the East Coast, notorious for high gasoline demand, averaged prices around $2.99 per gallon, down 1% from last year, while the Midwest reported averages of $2.86 per gallon, remaining stable compared to last year. Awareness of these price fluctuations is crucial for small business owners to devise effective budgeting strategies and adapt to economic fluctuations.
As gasoline prices trend lower heading into the holiday season, small business owners stand to benefit from lower fuel costs, potentially leading to higher margins and opportunities for promotions or discounts. However, they also need to remain cognizant of regional pricing variances that could affect operational viability.
Understanding these dynamics not only allows for improved financial planning but also empowers small business owners to navigate the upcoming holiday season strategically. For detailed insights on gasoline pricing, small business owners can refer to the original analysis from the U.S. Energy Information Administration here.
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