High pump prices fail to alter driving habits
Experts say many Americans are locked into reliance on cars, and no one is sure at what price point — $4 a gallon? — demand will slip
NEW YORK — For all their complaining as they pay $3 a gallon or more to fill up their cars, few American drivers have yet to reach the point of cutting back.
That's the message from government statistics showing demand for gasoline is only just starting to level off even as refinery outages and tight supplies have sent pump prices soaring 43 percent since the end of January.
And brace yourself: Experts say that with gas already closing in on $4 a gallon in Chicago and San Francisco ahead of the peak summer driving season, higher prices could be in the cards.
"I drive 55 miles each way to work every day," said Sandy Colden, of Medford, N.J., one recent morning while loading groceries into her Honda Pilot SUV. "So I really don't have a choice, unfortunately."
Colden's not alone. Most Americans are locked into their driving habits and can do little to alter their fuel-buying patterns when prices rise, experts say. For example, the number of workers with commutes lasting longer than 60 minutes grew by almost 50 percent between 1990 and 2000, according to census data.
Weekly gasoline demand in April increased as much as 1.9 percent over the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration (EIA) data.
Experts disagree over how high prices have to rise before consumers are shocked into driving less — at least temporarily.
"We might actually see some reaction at $3.50 [a gallon]" nationally, said Larry Compeau, executive officer of the Society for Consumer Psychology and professor of marketing and consumer psychology at Clarkson University in Potsdam, N.Y.
Lars Perner, assistant professor of clinical marketing at the University of Southern California's business school, disagrees, saying the tipping point is more likely $4 a gallon.
Try telling that to Jennifer Hoover, 32, a graphic designer who lives in the San Francisco area. She said she was startled by her bill — $58.69 to fill up her silver Audi sedan with $4.09 a gallon premium gasoline Tuesday — but was late for an appointment and had no other choice.
"I was just thinking when I drove up — 'Why am I stopping here when it's $4.09?' " she said. "But it's on my way and I'm late and I have to do what I have to do."
There was consumer reaction in September 2005 after Hurricane Katrina outages pushed prices above $3 gasoline for the first time. Demand dropped as much as 6.5 percent. "There was ... something significant psychologically about the $3 barrier," Perner said.
Since then, however, consumers seem to have adapted, with demand rising throughout a brief period of prices above $3 a gallon last summer.
"People complain about higher oil prices ... but they still drive their cars, they still buy their SUVs, they don't want to car pool," said Fadel Gheit, an energy analyst at Oppenheimer & Co.
Consumers may suspect that oil refiners are colluding in the recent price spike, but analysts say the real culprit is an unprecedented number of refinery accidents and maintenance outages this spring — combined with drivers' rising demand for fuel. Most prominent of the outages was a February fire that shut down Valero Energy's 170,000 barrel-per-day McKee refinery in Sunray, Texas, for months.
"If you just count incidents, there are more this year than there have been in previous years," said Mike Conner, a specialist on refinery operations at the EIA.
Gasoline inventories fell by more than half to 93.5 million barrels in the week ended May 4 from 205.1 million barrels in the same week in 2006 and 214.7 million barrels in 2005, according to government figures.
While higher gas prices haven't done much to cut demand, they also don't appear to have had much effect on consumers' car-buying behavior, according to Autodata Corp. Sales of light trucks and SUVs declined 3 percent in April, less than the 12 percent slump in car sales. Light trucks and SUVs continue to make up the majority of vehicle sales in the U.S., or about 53 percent.