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Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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A Thanksgiving Tale: 50 Million Turkeys And A 5 Billion Mile Drive

Thanksgiving Turkey

This week almost 50 million Americans will take planes, trains, automobiles (and even boats) to travel miles from home for Thanksgiving festivities according to AAA. The auto club sees more than a million extra travelers leaving home this year between now and the end of the month.

Thanksgiving is traditionally of as a time for turkey and dinner with family, but given these statistics perhaps it ought to be thought of as a time for travel. After all, the first Thanksgiving was really about travel as well with Europeans having just finished the perilous journey across thousands of miles of ocean in wooden boats.

So echoing far too many Charlie Brown holiday specials, what is the true meaning of Thanksgiving – turkey or travel? Well, setting aside the philosophy we can answer that question based on cash spent by families around the holiday. Do families spend more on turkey or gasoline for the holiday?

Let’s start with the gasoline. Assuming AAA’s figures are right and that roughly 49 million Americans will take to the roads this year, and households travel together, that implies about 12.5 million families are going to travel (2 parents plus around 1.9 children per household). About 90% of these trips are by car, with 3% going by train, boat, etc. and 7% traveling by air.

If the average trip by car is 400 miles total (about 3-4 hours each way), then that implies five billion miles of road traveled. The average age of a car is now almost 12 years old, so assuming the average car gets 18 miles per gallon on the trip, that means about 278 million gallons of gasoline used. With gas prices averaging $2.13 per gallon, that means $592 million in gas expenses. Related: Near Record Low Gas Prices This Thanksgiving

Boats and planes use considerably more gasoline (albeit in alternative fuel forms), especially since these tend to be longer trips as well. With that said, assuming the 6 million individuals traveling that way all use 500 miles each way of fuel, that suggests 6 billion miles traveled. Using a simple 10 miles per gallon of gas equivalent fuel economy, means 600 million gallons of gasoline equivalent. This would actually add an additional $1.3 billion in fuel expenses to our total. Again though, this half is a rougher calculation.

On the turkey side, the U.S. eats an estimated 50 million turkeys on Thanksgiving based on historical data and population growth rates. Some sources report that the average American eats 16 pounds of turkey – that’s a mindboggling number which doesn’t fit with the rest of the data, but perhaps each American family eats that much. The average 16 pound turkey probably costs about $24 this year given inflation. That means Americans spend about $1.2B on turkeys for Thanksgiving – 50 million turkeys at $24 each.

Overall, if we just count true gasoline versus turkeys, the turkeys come out on top. Adding in jet fuel and ship fuel, fuel comes out ahead. Of course, if we are counting related fuels, perhaps we should count related foods as well. Perhaps the turkey table has a stronger argument overall then, but both turkeys and gas are important components in a true American Thanksgiving.

Happy Thanksgiving!

By Michael McDonald for Oilprice.com

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