Americans Return to the Pumps

Cheap gas has drivers returning to the pumps, despite economic woes.

Consumers pumped 0.3% more gasoline last week than in the same period last year, according to gasoline station purchases compiled by MasterCard Advisors. That’s the first increase in gas consumption since April.

The US Energy Department confirmed this trend in a report this week showing gasoline demand up almost 1 percent last week from the previous week.

The national average price for a gallon of regular dropped to $1.68 a gallon this week from a peak of $4.11 a gallon in July, according AAA.

Confusion Reigns

Nobody seems to know how long the decline in gas prices will continue. Last month, the Energy Department pegged the 2009 average price at $2.37, but just this week reduced that average retail price to $2.03 a gallon for next year.

The agency estimates that crude oil prices will average $51 a barrel—down from $63.50 estimated a month ago. Oil prices hit a low of $40.81 last Friday, but jumped to nearly $50 this week based on news that Saudi Arabia will make good on promises to cut output.

The US government’s response to a pending auto industry collapse is wreaking additional havoc to oil markets. The prospect of a prolonged recession resulting from one or more Detroit automakers going bankrupt—and thus reducing consumption—sent oil prices lower. But just today, oil climbed more than $3 from the day’s lows after the Bush administration said it may tap the $700 billion bank-rescue fund to prevent an auto-industry collapse, easing concern about a prolonged recession that will cut fuel demand.

The only certainty during these times is uncertainty. With the fate of the American auto industry up in the air, the length of the economic recession unknown, and the direction of oil markets in disarray, American consumers can only respond to the real price of gasoline at the corner gas station at this exact moment. The response apparently is to fill ‘er up while the price is low.


  • Bryce

    We will see how long these prices last.

  • Picky McPicky

    Simple economics. Right now travel in a car is cheaper than public transportation, car pooling, and other methods that people fled to when gas was $4.75 a gallon. Again folks…it’s all about saving money. We work for spending money, we spend to live and live to spend and at the end of the day, we hope that there is money left over to retire on.

    Right now, we are only concerned about how to make ends meet in a more cost efficient manner. Cheap gas is providing us that alternative. I hate to say it, but the best alternative energy solution for the american people is the energy source that costs us the least amount of money…and right now that alternative source of energy happens to be gas. I hope some day to create new wealth and new jobs that a whole new energy source other than fossil fuels is developed…but as I stated, it will have to make economic sense. I am NOT paying $40,000 for the right to go 70mpg. I don;t want to pay $10,000 to tell you he truth.

    This train of thought is way, way, way out there for a conservative Republican like me, but one day, the human race will wake up and realize that buying a car is like buying a washer and dryer. We shouldn’t care how it looks…just as long as it works, does its job and doesn’t cost a lot of money to operate or run. A car shouldn’t have to cost $20,000 or more…It’s just a mode of transportation people….just like a washer cleans your clothes or a refrigerator keeps your food cold. It shouldn’t be an extension of your personality or a a judge of ones character or success. Yeah, you can build in luxuries if that’s your preference, because some people are more dependent on their cars than others…but just get us from point A to point B… cost efficiently, so that our Point B can be a Four Seasons Resort on all the Money we saved.

  • DJB

    Driving your own car is always more expensive than public transportation, even when gas is cheap. When you add up ALL the costs of driving it becomes clear: the cost of the car divided by the number of miles you expect the car to last (cost of the car per mile), plus gas, plus insurance, plus repairs, plus maintenance, plus registration.

    On top of that you have the environmental costs you’re not forced to pay for directly (but should be) like smog and climate change.

  • Anonymous

    we should go back to $1.00-.10/L. Its good for everyone. The consumer consumes less, alternatives are economically feasable to research and develop, oil compnies make the profits, car companies are forced to increase fuel economy standards due to consumer pressure and the environment wins as well because people change their ways as we witnessed when the prices were that high.

    There needs to be a pinch in the wallet.. From the numbers described above it seems like people did not learn their lesson.

  • Shines

    Picky,
    There is a difference here:
    This train of thought is way, way, way out there for a conservative Republican like me, but one day, the human race will wake up and realize that buying a car is like buying a washer and dryer. We shouldn’t care how it looks…just as long as it works, does its job and doesn’t cost a lot of money to operate or run.

    Washwers and dryers sit in a laundry room, noone sees them but the owner. A car is driven in public. How I look in my car is important to me (fortunately me ego is strong enough that I don’t need a souped up coup, luxury limo or super sized SUV). People want to look good in public – why mow your lawn – people see the outside of your house every day.
    As much as the ideal of not caring about the looks of your car and it being just a transportation device sounds good, human nature dictates that people will always care about what their car says about them.
    Your point about simple economics is why I am for a bigger gas tax. Sure it risks damaging the economy but it also is a disincentive for buying an inefficient vehicle.
    I wish there would also be an excise tax on vehicle weight (like there is for freight haulers). A bigger vehicle creates more wear and tear on the roads and the environment.
    These taxes still leave the final decision to the vehicle buyer… Do I want my super big super heavy gas guzzling vehicle with (taxed)gas prices and annual vehicle weight surcharges this high? If yes well then go ahead and buy it. Most folks will still be buying cars, just making more economical decisions.

  • Todd1964

    I have quit riding the train and have gone back to driving my truck to work. The train is $4.50 each direction for $9.00 per day. My truck is two gallons per day for a current total of $2.90 per day (Unleaded is $1.45 per gallon in my area). The truck is paid for and requires little in the maintenance department. Also, regardless if I take the train, the truck expenses still exist, just not the fuel expense. The majority have done the same as the park and ride train lot went from over-flow to only one-third full. However, we did get used to eliminating all non-essential driving and still drive less and use far less gasoline than we did three years ago. Also, my commute time has been cut by 30 minutes in each direction for one extra hour with my family. I sold my HCH, my wife hated it from the beginning! I loved it when gas hit four bucks, but she still hated it. That is when I started taking the train when I sold my HCH.

  • Adrian

    To Everyone Here:

    Many of us consider, when it comes to private transportation, the notion of the car. True, the car is the mainstay in America to get you around from point A to point B by yourself, but let it be known here, that this is not the ONLY way to get around.

    Anyone out there ever considered the notion on riding a Motorcycle or Scooter instead?

    No? . . . Or, ‘yes’, but feel like it would be a waste of time or too much of a problem? (for whatever reason?)

    Well, then consider these financial factors Im about to give you, and think about this other- vehicle alternative:

    Type: Car (1987 Acura Legend – V6)
    Displacement: About 2,500 ccs (Cubic Centimeters)
    Tank size: 11 Gal.
    ——————-
    MPG on tank: (about) 20 MPG/(com.average)
    Total miles on tank: 220 mi.
    Cost of car: $1,000
    How much to fill tank (@ $1.50 gal): $16
    Cost for gas/year (25 miles each day/average): $684
    Car Insurance (AAA- min. Liability only/year)- $1,020
    Registration- $100
    *******************TOTAL COST: $2,804

    Type: Motorcycle (2008 Kawasaki Ninja 250 R)
    Displacement: About 250 CC
    Tank size: 5 Gal.
    ——————-
    MPG on tank: (about) 55 MPG/(com.average)
    Total miles on tank: 275 mi.
    Cost of motorcycle: $4,000
    How much to fill tank (@ $1.50 gal): $7.50
    Cost for gas/year (25 miles each day/average): $248
    Car Insurance (AAA- min. Liability only/year) [about]- $ 200
    Registration- [about] $100
    *******************TOTAL COST: $4,548

    It should be noted that these figures (obviously) don’t consider things like repairs or other fees. Now… the Motorcycle is more expensive within the first year, but by year two, it would only cost about $600 dollars more to keep running, whereas you would add $2,000 dollars for the car- which, by the way, is 20 year old, and the motorcycle is brand new (this also assumes that gas stays the same… which, obviously, it won’t)

    So, riding two wheels is definitely something you should all consider… if you buy a smaller scooter (say a 150 cc engine -which would be able to go at least 60 MPH) -, the costs are reduced further still.

    I know safety is also an issue with two wheels, and it is my utmost belief that if you are capable and confident with your abilities of driving a car- you are also just as capable riding a motorcycle or scooter, taking into the fact you are a good driver or rider.

    I also found that the process for “behind the wheel test” (aka, getting the motorcycle license) was far easier and less painful than the regular drivers incense.

    And, like everyone is saying here, and as well ALL know…. gas will go up… so when most of you are gonna start filling up $40, $50, or more for a tank on gas again, Ill look forward to paying less than half that amount when I start riding once more…..

    -Adrian.

  • Ross Nicholson

    “Driving your own car is always more expensive than public transportation, even when gas is cheap.”

    Even with all externalities, that is never true, ever, unless your time is of no value to you. Public transportation is glacial, filthy, uncomfortable, even intimidating. Even if my time had no value, my safety would still have enough to minimize my exposure to the real dangers of American public transportation.

  • DJB

    Wow, I don’t like to throw the word “snob” around, but you’re a snob.

    Public transit is slower than driving unless traffic is really bad. It’s a fair point. However, most drivers neglect to calculate the full cost of their cars as I outlined above. The time you spend on transit doesn’t have to be wasted. Bring a book. Driving solo is destroying the environment.

  • Picky McPicky

    DJB
    People don’t care about your long term calculations. Life is about cash flow. I filled up my Hyundai today for $14. Thats a third of what I have been spending and frees up over $30 a week that I can spend a bit extra on the kids for Christmas.

  • mpgomatic

    I’ve taken the train four times in the last week, twice to NYC (on NJ Transit) and round trip to DC (on Amtrak) for the EDTA conference.

    Each and every experience was excellent. The DC was exceptional. I was going to drive, but decided to take the train, instead. This saved more than an hour each way, avoiding some messy traffic and eliminating the need to pay $41 per night to story my car in the hotel’s garage.

  • AP

    Good points discussed above. I am a conservative-leaning independent and generally a capitalist, but I think that one of capitalisms weaknesses is dealing with strategic resources like petroleum-based fuel. It’s strategic because of its finite supply and the unsavory countries that benefit from us buying it.

    This article points out how short our memory is as a country. The only effective way to “kick the habit” is to phase in a higher gasoline tax. I say we pass a law that schedules a gradually increasing tax that is returned as an income tax credit. It would go

    1) No increase for 2 years, to let people change their buying plans and auto companies to change their production plans.

    2) For the following 5 years, add $.10 to the gasoline tax every three months, to a maximu of $2/gallon. Return this money to all taxpayers every year as an income tax credit (about $1000/person at $2/gallon).

    This simple program (the Strategic Energy Tax Shift?) would naturally create the right incentives to genuinely lower petroleum consumption. Customers would demand efficient cars AND drive them less. Domestic auto manufacturers would know there would be demand for those cars, and would be able to confidently invest their tight resources in them, knowing they could sell them profitably.

    As a conservative, I like it because it lets companies and consumers determine the best way to balance fuel efficiency with all the other important vehicle performance areas (space, comfort, acceleration, braking, etc.), rather than having some bureaucrat decide everything will be electric – or hybrid – or diesel – or ethanol fueled – or ? I also like the fact that it doesn’t try to answer the question “What is a truck?” like CAFE (corporate average fuel economy) does, whether imported vehicles should count toward a domestic auto maker’s CAFE, or whether alternative-fuel vehicles should get a bonus in CAFE calculations. CAFE has been too complicated and makes very strange decisions to be made in designing a car.

    Thinking as a liberal, it would do more to reduce petroleum consumption, and it would remove the main liberal complaint that a gas tax is regressive. The income tax credit would be given back to all filers, whether they pay taxes or not. Conservatives would have to swallow a little hard to accept this, but on the whole, it reduces bureaucracy.

    Once the tax credits are paid, this would give people some change to buy a more fuel-efficient car, which is good, since the required technology will drive up costs.

    As someone who works for a domestic automaker, what I like best is that it puts customers on the same page with us on a consistent basis. We wouldn’t need to worry about whether cheap fuel prices might suddenly encourage people to drive SUV’s again.

    How about petitioning for this?

  • Gerald Shields

    Picky McPicky, you said:

    “Simple economics. Right now travel in a car is cheaper than public transportation, car pooling, and other methods that people fled to when gas was $4.75 a gallon. Again folks…it’s all about saving money. We work for spending money, we spend to live and live to spend and at the end of the day, we hope that there is money left over to retire on.”

    I don’t know where you’re getting that “Simple Economics” from. From where I stand, you got to pay for insurance, preventive maintenance (the older the vehicle, the more you are paying), plus any tolls you may encounter, plus traffic and parking tickets you might get as well as gas.

    Whereas, I’m paying about $63.00 a month for a bus pass, a little more for one that can get me through the zone fare system in King County, WA state without paying extra.

  • crookmatt

    In my opinion the major problem with public transit in the US is two fold.

    1. Many places in the US simply do not have the population density to support large scale public transit systems. These systems naturally have more adantage in large cities where there are pleanty of customers, they carry more people compared the the amount of physical space they take, and if built properly they can be faster than the congested big city traffic.

    2. Even in big cities where we do have big public transity systems, many are not built or run efficiently. This is the biggest problem. You can’t do much about public transit in places like (where I’m from–Wyoming, just not enough poeple), but where there are enough people the public transity system needs to be so efficient that it is actually faster and more convenient than taking a personal car.

    I’ve spent some time in Japan. Their transit systems are amazing. They’re fast, efficient, clean, definity better than taking a car. Until we build public transit the right way, people will always go back to their cars once the price of gas goes back down.

  • DJB

    My calculations aren’t long-term so much as they are comprehensive. Most people make the mistake of thinking the cost of driving is the same as the cost of gasoline, when in reality it is much higher.

    If more people did care about actually knowing how much they are spending on transportation, we’d be much better off as individuals and as a planet.

  • Bryce

    lets not forget that public transit is boring. And at the end of the day, you don’t own anything either.

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