Lower Gas Prices to Spur Record July Fourth Road Trips, AAA Says

A customer refuels at a gas station in Dallas, Texas. Photographer: Shelby Tauber/Bloomberg Photo by Shelby Tauber /Bloomberg

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(Bloomberg) — A record number of US drivers are expected to hit the road for the July Fourth holiday period starting next weekend, helped by the cheapest gasoline in four years.

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About 61.6 million people will travel by car from June 28 to July 6, a 2.2% increase from last year, the American Automobile Association said. The group’s travel outlook was compiled before the recent escalation in the Israel-Iran conflict, which has boosted oil prices and threatened to raise US fuel costs. 

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The robust road-trip forecast is being driven by gasoline prices that are down about 25 cents per gallon from a year earlier and the lowest for this time of year since 2021. While prolonged hostilities between Israel and Iran may boost fuel prices, they have room to rise before changing consumer dynamics, the organization said.

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“Because gas prices have been so much lower than this time last year, it’s going to be a bit of a rise, but there’s no indication we will hit where we were last summer,” said Aixa Diaz, an AAA spokesperson. 

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Even with the increase in road trips, gasoline demand isn’t projected to get a significant boost as vehicles’ improving fuel efficiency curbs consumption. Demand — which was down about 1% from last year as of last week — will decline this year and next, and retail gasoline prices will drop across most of the US through the end of 2026, according to the Energy Information Administration.

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Oil prices had slumped for much of this year as OPEC and its allies revived supply faster than expected and US President Donald Trump’s trade war weighed on the outlook for demand. Those dynamics had helped keep gasoline prices in check, but now hostilities between Iran and Israel are emerging as key drivers of the market, raising fears of disruption to crude production and a potential blockage of the Strait of Hormuz.   

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The surge in oil prices from the Israel-Iran conflict is “setting the stage for additional price hikes at gas pumps across the country,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “Motorists should prepare for what will likely be modest price increases — for now — but the situation has the potential to worsen at any moment.”

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While road trips are the most popular form of travel, a record 5.84 million people are expected to fly during the holiday period as well, up 1.4% from last year, AAA said. The slower growth for air travel is a consequence of rising costs, with a round-trip domestic flight averaging $810, 4% more than last year, the group said. 

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Still, the Transportation Security Administration screened more than 3 million passengers in a single day over the Memorial Day holiday, nearing its busiest day ever.  

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