Gasoline use on the decline
NEW YORK – Florida dental products salesman Jean Laborde doesn’t take as many fishing trips as he used to. Student Kaitlin Kelly has started carpooling to work and school in New Jersey with friends.
U.S. consumers caused a remarkable 1 percent drop in gas consumption the last eight-week-period compared with a year ago.
As gas prices rose, Americans were expected to trade their sport utility vehicles or drive less, but the strong economy kept pumps busy. When gas prices hit a record $3.23 a gallon last May, Americans shrugged it off as another temporary spike, but that was before the economy spiraled downward.
Sharply higher prices for food and other basic goods and weak home prices that limit the ability to cash out equity for spending money are wearing consumers down.
“In the past, their budgets weren’t being attacked from all sides,” said Joel Naroff, an economist and president of Naroff Economic Advisers in Holland, Pa. “People are adjusting not only to the rising price of gasoline, but now the soaring price of food.”
With pump prices averaging $3.28 a gallon and expected to peak between $3.50 and $4 this spring, the question becomes: When will drivers begin using significantly less gas? And once we get there, will prices fall?
Experts point to California for one answer. In November, demand plummeted by 3.7 percent as gas prices soared past $3.40 a gallon – 30 cents over the national average.
That drop is extraordinary, considering gas consumption grows about 1.5 percent year-over-year just to keep up with the population, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J.
The housing crisis has hit the nation’s most populous state particularly hard, and employment has suffered. In November, the ranks of California’s unemployed jumped 22 percent from the previous year.
The country as a whole, meanwhile, drove slightly more in November than it had a year earlier; of course, gas prices averaged only $3.07 a gallon then.
That indicates some consumers begin changing driving habits between that price and $3.40 a gallon.
The level at which gas prices force households to cut back is subjective and comes sooner to lower-income families. But there’s evidence we’re already at a point where average consumers are cutting nonessentials or “trading down” to cheaper brands.
“It’s affecting consumer confidence because it’s becoming more and more difficult to sustain the standard of living,” Naroff said.
Laborde, of Tampa, Fla., used to drive 30 miles from his home in north Tampa to fish once a week. But a recent trip just to south Tampa was the first time he’d been fishing in three weeks, Laborde said. “I’ve cut down my leisure driving,” he explained.
Web designer Norman Apalis, of Pleasanton, Calif., says high gas prices are forcing him to think about vacationing closer to home and eliminating his kids’ swim lessons.
While many Americans have no choice but to drive to work because of a lack of public transport options, some find they can moderate their gas expenses by sharing rides.
Peter Zampella, a math teacher at Snyder High School in Jersey City, N.J., commutes 40 miles from his home in Middletown, N.J. every day with 13 other teachers in a van pool. Despite having to chip in $86 a month for the van and another $60 apiece to cover gas and tolls, Zampella figures each member of the van pool saves more than $1,000 a year in gas.
“As gas prices go up, it’s going to be even more beneficial,” Zampella said.
So far, there’s little evidence that falling consumption is weighing on gas prices, which have jumped to several new national records in recent days, despite the downturn in demand. Prices in California didn’t nosedive after November: They kept rising and now average $3.631 a gallon, highest in the nation.