Overview
Travel for the July 4 holiday is proceeding as planned across the United States, despite fuel costs that remain elevated relative to a year ago. A de-escalation in U.S.-Iran tensions has eased concerns that shipments through the Strait of Hormuz could be disrupted, helping to temper a sharper spike in fuel prices. Even so, motorists are poised to encounter the second-highest average pump price on record for Independence Day weekend.
Prices and projections
GasBuddy last week forecast the national average price of gasoline to be about $3.75 per gallon on July 4, trailing only the $4.80 per gallon peak logged on July 4, 2022. The national average stood at $3.79 per gallon on Thursday, which is 63 cents higher than the same time last year, according to GasBuddy.
Commenting on the recent market movement, Patrick De Haan, head of petroleum analysis at GasBuddy, noted in his weekly note: "The declines came despite a turbulent week, as fresh attacks were traded between the U.S. and Iran before both sides agreed to halt hostilities just in time for Sunday. ... For now, GasBuddy anticipates the national average will continue drifting lower this week, though the situation remains anything but predictable."
Political pressure on retailers
Political leaders have also weighed in. U.S. President Donald Trump has urged gasoline retailers to reduce prices more aggressively, arguing pump prices have not dropped sufficiently since tanker traffic through the Strait of Hormuz resumed last month. U.S. Treasury Secretary Scott Bessent reiterated that message to gasoline retailers on Tuesday, encouraging them to lower prices as the nation marks its 250th birthday.
Travel volumes
Despite higher fuel costs, AAA expects a record 72.2 million people to travel at least 50 miles from home during the Independence Day holiday, exceeding last year’s 71.8 million travelers. AAA’s forecast shows travel by driving and flying will be relatively flat year-over-year, while other modes such as cruises are gaining popularity. The agency projects:
- 61.4 million people will drive to their destinations;
- nearly 5.85 million are forecast to fly;
- about 4.93 million are expected to travel by bus, train or cruise ship.
Denton Cinquegrana, chief oil analyst at Dow Jones Energy, described the mindset driving these decisions: "I think when it comes to summer holidays Americans will go through with their plans. ... It’s the ’I have had something planned’ mindset and ’I am not changing it, I’ll figure it out next week’."
Fuel demand and inventories
Data from the U.S. Energy Information Administration (EIA) shows U.S. gasoline supplied, a proxy for demand, rose by 356,000 barrels per day ahead of the holiday weekend to 9.13 million barrels per day last week, compared with 8.64 million bpd the same time last year.
Meanwhile, gasoline inventories fell by 2.3 million barrels during the week to 214 million barrels, and stocks along the U.S. Gulf Coast dropped to 76.48 million barrels - the lowest level since October 2024. Overall U.S. gasoline stockpiles stood at around 213.97 million barrels in the week ended June 26, roughly 8% lower than the same period a year earlier, EIA data showed.
Cinquegrana flagged the regional imbalance as a potential issue: "That (Gulf Coast inventory level) is probably more concerning from a supply standpoint than the U.S. being at the current deficit." Gulf Coast refineries account for more than 55% of total U.S. refining capacity and are a primary supplier and exporter of fuel to other regions.
Supply-side vulnerabilities
Analysts point to several factors that could reverse the recent price declines. Ongoing supply disruption risks include unplanned refinery outages in countries such as Russia and Mexico, while the approaching Atlantic hurricane season raises the prospect of weather-related disruptions to refining and distribution networks. If fuel balances continue to tighten, particularly in key U.S. markets, gasoline prices could remain elevated.
This article reports on current travel forecasts, price projections, inventory levels and related commentary from industry analysts, government data and market forecasters.