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Few Americans Celebrating Lower Gas Prices
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Retail gasoline prices dropped for the 34th consecutive day on Tuesday, hitting a summer low of $3.73 per gallon. Since reaching an all-time high of $4.11 per gallon in July, prices have fallen by more than 9 percent, reflecting a cool-down in crude oil speculation and lower than expected demand during the summer driving months.
Despite its recent decline, on average, gas is still nearly a dollar per gallon more expensive than it was last year—leaving little room (or money) for celebration. Record prices kept many Americans closer to home this summer. According to a recent Harris Interactive poll, 38 percent of those who chose to take vacations within 200 miles of their homes did so because of higher gas prices.
Does a 9 percent downswing in gas prices spell the end of high demand for Priuses, or a cool down in automakers’ race to build the next great fuel efficient car? Probably not. While some data indicates a slight drop off in the public’s interest in hybrids, a decline of 35 cents per gallon won’t do much to slow down interest in fuel-sipping technologies—mostly because the sting of high prices earlier this year is still being felt, and the lack of viable transportation alternatives.
According to the Harris poll, only 7 percent of Americans take public transportation to work, with only 4 percent carpooling. Given the cost, difficulty, and construction time associated with improving—and in many cases building from scratch—local public transportation infrastructure, it’s unlikely that the United States will cease to be a car culture anytime soon.
The respective supply and demand curves in auto and gasoline markets are squeezing Americans between declining gas prices, reduced consumption (on pace to decline for the first time in 17 years), sustained interest in smaller cars, and rising nerves about when the price of gasoline could spike above $4 once again. With the auto market in a state of flux and concerns about the health of the economy reaching levels not seen in nearly two decades, Consumers will likely gravitate toward vehicles that provide the best gas mileage at the lowest sticker price.