Surging Fuel Prices Aren’t Curbing Holiday Plans Yet

0:00This is a new era of American innovation. Google AI is helping Americans stay safe from scams. From real-time scam detection on Pixel to proactive phishing blocking in Gmail. Learn more at g.co slash American Innovation.

0:18Evacuated ship passengers test positive for Hantavirus as they finally head home. Plus, why gas prices are about to get a lot worse for Californians. And Expedia's CEO tells us that consumers may be anxious, but they're still booking trips. Everybody is amazed that demand is holding up as well as it is. And we look at indicators, we look at consumer confidence, we look at fuel prices, we look at air ticket prices. You know, despite those, the demand is there. It's Monday, May 11th. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:01Around 150 passengers from a Hantavirus-stricken cruise ship are finally returning home after spending 40 days at sea. The ship was allowed to dock in Spain's Canary Islands, where authorities have been coordinating flights for quarantine and isolation. After disembarking, a French and American passenger have both tested positive for the virus, while another American developed mild symptoms. The WHO's Director General, Tedros Gabrielsus, oversaw the transfer of passengers in Tenerife and reiterated yesterday that this is not the onset of another pandemic. This is not another COVID. And the risk to the public is low.

1:43So they shouldn't be scared and they shouldn't panic. U.S. passengers are arriving in Omaha, Nebraska for monitoring at a national quarantine unit led by medical director Dr. Michael Wadman. We have protocols in the quarantine unit that provide for safe care of these persons, including just all the activities of daily living so that they can have a comfortable stay, but also have it in an area that's protected and limits the spread of the pathogen. Our facilities have negative airflow rooms, each one individually, negative airflow, as well as filters to limit spread of pathogen. Public health officials in states including Virginia, Texas, and Georgia are monitoring other Americans who got off the ship before authorities confirmed the outbreak.

2:31Iran is rejecting a U.S. proposal to end the war, which included calls that it dismantle its nuclear facilities, leading President Trump to call Tehran's response totally unacceptable. So how close did the two sides come to an agreement several weeks after they first traded peace proposals? Journal correspondent Margarita Stancotti has been keeping tabs on their diplomacy. So the two sides have been trading proposals over the last few weeks. Iran responded to the latest U.S. proposal recently, and it essentially said, this is how the fighting could end. There will be this gradual reopening of the Strait of Hormuz to commercial traffic, so long as the U.S.

3:07lifts its blockade. But it's also saying we don't want to talk about the nuclear program right now. We will negotiate that, but we want to do that separately over the next 30 days. And the response from Trump has been that this is completely unacceptable. So we're still waiting to see how the Iranians will respond to that. But on the nuclear issue specifically, Iran has shown some degree of flexibility, some opening. It has proposed to have some of the highly enriched uranium diluted and the rest of it transferred to a third country. So it is possible that we will eventually see an agreement on that front as well, but not right now.

3:48Well, fading hopes of a peace deal are reigniting a climb in oil futures, with Brent and WTI contracts up around 2 % today. According to AAA, Americans on average are paying$4.52 a gallon for gas, with drivers in California hardest hit. Prices there are north of$6.15 a gallon, and likely to rise in a state that's reliant on imports for three-quarters of the oil it consumes. A tanker carrying Middle Eastern oil just stocked in Long Beach, but according to market intelligence firms Vortexa and Kepler, it'll be the last one to do so for months, as some Asian fuel exporters have chosen to keep supplies at home.

4:29Tankers have been transporting fuel to the West Coast from the Gulf Coast and Alaska after Washington relaxed rules on foreign vessels carrying goods between American ports, though a Chevron spokesman said that a lack of available vessels is slowing the amount of relief possible from rerouting supplies. Meanwhile, to cushion against pricier gas nationwide, U.S. Energy Secretary Chris Wright is weighing a suspension of the roughly 18 cents a gallon federal gas tax. Here he was when asked about that proposal on NBC's Meet the Press. We're open to all ideas. Everything has tradeoffs. All ideas to lower prices for American consumers and American businesses.

5:07I asked Journal Finance Editor Alex Frangos what those tradeoffs might be. The main tradeoff is if you suspend a tax, then you don't get the revenue. And the gas tax and tax on diesel brings in about$37 billion a year for the highway trust fund, which is used to fix your interstate highways around the country. And that trust fund has been dwindling over the years because the tax is a fixed amount around 18 cents per gallon. But it's been 18 cents a gallon since 1993. And it's not indexed to inflation. So you get rid of it for six months. There's, you know,$17,$18 billion that the federal government won't have.

5:45The other factor is that if you cut the gas tax, you're lessening the pain for drivers, but that just means they're going to drive more. And what you really want in these situations is for drivers to drive a bit less and conserve oil and lessen the demand a little bit in order to take the pressure off the market. Meanwhile, China's factory gate inflation has soared to a four-year high as the war in the Middle East keeps fueling higher energy costs. Consumer price growth also accelerated, but unlike in other countries where rising inflation is a concern, China has been battling years of deflation, and so the change in pricing could be a sign of the economy improving.

6:26That data comes ahead of tomorrow's U.S. CPI reading for April, the main data point for the week, with investors otherwise keeping their eyes on Thursday's summit between President Trump and Chinese leader Xi Jinping. Up next, we'll hear from the CEO of Expedia about how fuel prices are affecting your travel plans. That's after the break. This is a new era of American innovation. Google AI is helping Americans stay safe from scams. From real-time scam detection on Pixel to proactive phishing blocking in Gmail. Learn more at g.co slash American Innovation.

7:07With jet fuel prices soaring, airlines keep warning investors about coming hits to their bottom lines. And with American consumers already inflation wary, is the travel industry in store for some major turbulence? Well, who better to ask than Arian Gorin, the CEO of Expedia Group, which in addition to running Expedia.com, runs Hotels.com, Vrbo, and a number of other booking sites. Ariane, we know prices are rising, particularly in airfare. How is this affecting summer travel plans? Is it? Look, we are still seeing really healthy demand for summer travel plans. We just reported our first quarter earnings and had the strongest first quarter start that we've had in years.

7:51Now, obviously, the events that happened in the Middle East in March did have an impact. It had a wave of cancellations, especially in Europe and Asia. We also saw travel advisories into Mexico that dampened demand somewhat in March. But, you know, the cancellations have dissipated in April and we're seeing demand pick up again. So people definitely want to get out there and travel for the summer. Did you get involved in any way as a company to try to prevent sort of a contagion of cancellations from occurring? Or is it just decisions people have arrived on completely on their own? Look, you know, there were a lot of cancellations just because flights were canceled.

8:26The Middle East actually was almost 10 % of global air traffic. And so when the conflict broke out, there were a lot of cancellations. And when that happens, our focus is taking care of travelers, taking care of travelers who are in-trip and taking care of travelers who had planned trips. So we work with our hotel partners, our airline partners to extend flexibility and then also just to make sure that we can pick up the phone and answer questions for travelers. So we spend a lot on AI to automate and have self-service. But at times like that, people want to talk to a real human being. And that's what we do at Expedia Group.

9:01Are we seeing prices, whether it's for hotels or airfare, continuing to go up? And if so, is it global or are certain regions being spared or even, I don't know, do we have seen enough sort of hit to demand that actually some things could get a bit competitive and maybe tempting for someone looking for a deal? You know, we are looking, you can imagine, in detail at the numbers to see, are we seeing a shift in consumer behavior from fly-to to drive-to? Right now, we're not seeing it in the numbers. But, you know, let's see. I think this summer in the U.S., there are a lot of big events. There's the World Cup.

9:34There's the U.S. 250th anniversary celebration. Perhaps we will have more domestic travel. Perhaps in Europe we'll have more domestic travel. We'll see. But right now, we're not seeing any kind of big shifts coming through in the numbers. I guess high prices at the pump could be one of the factors where the shift from fly to to drive to is obvious, but there's pain to be had there as well. But, you know, one thing that COVID taught us, and I know it's so long ago, but people really value experiences and getting out in the world. And they will adjust based on, you know, what are the prices, what's available out there.

10:06But people want to get out and travel. I mean, what is the anxiety level in this moment? I know you're saying bookings seem pretty healthy. The demand is there. You know, this is a question we've been asking CEOs across industries is it's fine for right now, but is there concern things don't get better, particularly on the pricing front that, I don't know, we could be looking at a softer demand in the fall, in the winter. What are you hearing? You know, absolutely. Because I think everybody is amazed that demand is holding up as well as it is. And we look at indicators, we look at consumer confidence, we look at fuel prices, we look at air ticket prices.

10:38You know, despite those, the demand is there. But obviously, as we look forward through the year, who knows what's going to come? Ariane Gorin is the CEO of Expedia Group. Ariane, thank you so much for being with us on What's News. Thanks so much. And that's it for What's News for this Monday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.

11:37Thank you. new era of American innovation. Find out more at grow.google.com.