Living With $4 Gas
The national average price for gasoline rose 9 cents over the last two weeks, beginning a surge predicted to bring $4-per-gallon prices in the coming months. The average price of self-serve regular gasoline on Friday was $3.19 a gallon, with the steepest prices in the country found in San Francisco at $3.58. Compared to a year ago, national gas prices are up 64 cents.
On Tuesday, crude oil rose to a record for a fifth day, climbing above $109 a barrel, lifting gasoline prices to record levels. The early record does not bode well for motor travel during the peak summer demand season.
According to a spate of recent surveys, the rise in gas prices is changing general consumer buying patterns—but not driving habits. A Nielson Co. survey found that 70 percent of U.S. consumers are combining around-town driving for errands and shopping, while 39 percent said they’re just staying home more often. According to a recent survey by Kelley Blue Book, 44 percent of consumers said they’re eating out less to offset the additional money they’re spending on gas. Forty percent said they’re cutting back on entertainment spending, and 9 percent said they’re delaying the purchase of a new home.
A survey by the Automotive Aftermarket Industry Association sets a tipping point at $4 gas, when 65 percent of American drivers said they would change their driving behavior. But some analysts believe that $4 prices at the pump must be sustained for a long period in order to yield significant changes. Art Spinella of CNW, a market research firm, said, “People are very, very capable of absorbing $3 gas into the family budget. If it’s a spike, they can do it at $4,” he said. “But if it lasts for six months or more, it will be very difficult to absorb into household income.”
Bob Schnorbus, chief economist at J. D. Power & Associates echoed that sentiment, suggesting that consumers have not yet fled larger vehicles. He told U.S. News and World Report, “If $4 gas is only short-term, people will do what they’ve been doing the last five years: complain but keep on buying.”
In the past five years, hybrid sales have grown from 38,000 in 2002 to 350,000 in 2007—but remain less than three-percent of the new car market.