Americans Go From Rage To Resignation Over $4 Gasoline

When gasoline prices shot to $4 a gallon in 2008, sticker shock cut fuel demand and helped send world oil prices tumbling by more than $100 a barrel in just five months.

Pump prices have returned to near those highs, averaging $3.95 a gallon after rising 36 percent in a year. Oil has also soared, with Brent trading just over $122 a barrel and U.S. crude over $110.

But this time, there are ample reasons to suspect $4 gasoline won't slash demand or trigger another oil price rout. Outrage over prices among American drivers, who consume an eighth of the world's oil, is turning into resignation with summer driving season around the corner. Motorists may bristle, and alarm over fuel costs is growing in Washington, but experts say the tipping point at which prices would slash demand has likely risen sharply since 2008.

"In 2008, $4 gasoline prices seemed so high they were almost inconceivable. They won't be viewed the same way this time," said Lars Perner, a consumer behavior expert at the University of Southern California, who has written about fuel.

"Back then, the price at which demand fell off sharply was around $4. Today, the price may be $5."

Beyond the deja vu factor, several other market shifts make a demand collapse less likely. Although new cars are becoming more fuel efficient, fewer Americans are buying them, and the average age of a U.S. passenger vehicle is 10 years.

Meanwhile, used U.S. car sales outpaced new car sales by more than 3-to-1 last year, when 11.5 million new light vehicles were sold, down 31 percent from the annual average in the decade before the U.S. economic downturn.

Unlike in 2008, when the U.S. economy was entering a tailspin, employment has been rising, pushing more commuters onto roads and potentially making them less anxious about paying for fuel. Spending at the pump may also be less discretionary. In recent years recreational summertime driving has been making up less of U.S. fuel use.

U.S. gasoline consumption peaked in 2007 and has since fallen 13 percent, or 1.2 million barrels a day on average. But this year, high prices are having only limited demand impact.

Even as pump prices rose over the last four weeks, U.S. retail gasoline sales were off only 1.2 percent from year-ago levels, according to MasterCard.

Perhaps more telling, the clip of the decline appears to be leveling off. MasterCard analyst John Gamel said the firm's surveys have shown smaller declines occurring each week.

Investment bank Morgan Stanley, in research last week, said it has "not seen any material evidence to convince us any (gasoline) demand destruction is taking place in the U.S."

In another gauge of changing perceptions, U.S. media coverage of high oil and gasoline prices has been thin this year compared to 2008, when gasoline's spike was a top story.

The Pew Center, which surveys what's trending in the U.S. media, notes that news content about high fuel prices made up nearly 2 percent of mainstream press coverage in April of 2008, when U.S. retail gasoline prices averaged $3.46 a gallon.

In spite of higher prices last month — gasoline averaged $3.83 a gallon — press coverage was closer to 1 percent of total content.

One caveat from Pew: 2011 has been a year of "mega-stories" in the news, from unrest in the Middle East to Japan's earthquake and ensuing nuclear meltdown.

The jobs factor
Joblessness is still keeping millions of commuters off the road. Higher unemployment alone may be dragging down U.S. vehicle miles traveled by 2 percent compared with the end of 2007, according to James Coan at Rice University's Baker Institute in Houston, Texas.

The unemployment rate is actually higher now than it was in 2008. But back then joblessness was getting worse while now it has been improving. Unemployment has fallen to 8.8 percent from a peak of 10.1 percent during 2009.

Workers are not necessarily keeping cars in the garage and flocking onto trains, buses or subways for their commute.

A broad measure of U.S. public transportation usage showed total ridership fell by around 4.5 percent between 2008 and 2010, according to American Public Transportation Association (APTA) data.

Preliminary data for 2011 suggests ridership is rising again, but APTA also says 46 percent of Americans have no access to public transportation. According to the group's estimate, $5 U.S. gasoline would likely lead to a 15 percent increase in public transportation usage.

At U.S. auto plants, 2010 model-year new cars had average fuel efficiency ratings of 32.9 miles per gallon (mpg), up from 31.2 mpg for 2008 models.

General Motors Co. said Tuesday its U.S. new car sales in April jumped 26 percent from a year ago, with more buyers choosing fuel efficient vehicles with smaller engines.

But Americans are buying far fewer cars than they did before the economic downturn, and the average age of a U.S. passenger vehicles has risen since then to 10 years.

Car models from 2002 -- the new vehicles of a decade ago -- are on average 11 percent less fuel efficient than 2010 models, according to the U.S. Environmental Protection Agency.

"Not surprisingly since the economy went south in 2008, people are holding onto their vehicles longer," said Robert Sinclair of the American Automobile Association.

Discretionary driving?
Evidence is mounting that as U.S. motorists pay more for fuel, they are cutting back in other areas of discretionary spending.

Safeway Inc, the No. 2 U.S. supermarket operator and a gasoline retailer, said last week that sales of higher-priced fuel boosted first-quarter revenue but cut into gross profit. That dragged down margins for the chain, whose shares are down 4.6 percent since April 27.

The U.S. summer driving season — from late May to early September — is often a period of peak world oil demand.

But in recent years, seasonal driving has added less incremental demand. U.S. motorists are spreading fuel usage more evenly, a sign that that demand may be less elastic.

"I've already made as many cuts (in gasoline use) as I can since the last time prices rose," said Allie Irwin, a Chatham, New Jersey resident who drives a Buick sports utility vehicle.

"With my kids' activities and my own responsibilities, I'm just going to have to deal with the higher prices this time, and I'm not happy about it."


You must be logged in to post comments.

Username:
Password (case sensitive):
Remember Me:

Read Comments

Comments are posted from viewers like you and do not always reflect the views of this station.
  • by Obama Snake Oil co Location: Washington on May 9, 2011 at 05:30 AM
    So Eric, what you are saying the drilling moritorium doesn't effect America? My point, that is the last thing a president should have done in light of the prices already on the rise. Like I posted, Bush, just mere mention of drilling for oil in Anwar, plunged the price dramatically. Obama did just the opposite when he signed the moritorium, forcing us to buy from other countries. Even the Canadians that sell us oil, cannot believe how our government keeps shooting themselves in the foot with regulations..When the EPA went beyond congressional authority and put in new regulations under Obama, it is not hard for companies to survive in America. So, no, I do not let Obama off the hook on this...he owns it.
  • by Eric Location: Chocowinity on May 7, 2011 at 06:08 PM
    There isn't much Obama can do, or Bush could do, or McCain could have done, to fight the gas prices. Each of these men was (or would have been, in McCain's case) advised that the best way to fight high gas prices would be to compete with the Middle East oil companies, by drilling locally. We tried that, and look what happened in the Gulf of Mexico. Everyone loves to blame BP, but I think there's somebody out there who would have lost a lot of money if America started producing its own oil. The Middle East would have had to lower prices to compete. I'm sure Bush wanted and Obama wants to drill for oil here, but the environmentalists won't let them. This is a bipartisan group which wants oil prices high to force people to seek alternate means of transportation. That works in the big cities, but folks down here have to hope that if environmentalists get their way, enough city folk cut down on buying gas that the oil companies lower their prices. But then the city folk have to stick with their alternative transportation to keep demand down. So as you can see, blaming the President isn't helpful at all. Either of them.
  • by sam Location: windsor on May 6, 2011 at 08:42 AM
    Gas here is 3.95 a gallon. The minimum wage is 7.25 an hour. Bertie Co. is designated one of the poorest in the state, but they always seem to have some of the highest gas, utilities, and food prices. You can barely afford to go to work. Even if you have a better paying job, still all other expenses are steadily increasing. The pay in this county is not increasing, unless you are the county manager, so it leaves the rest of us in turmoil. To further embarrass citizens, they publish your name in the local weekly paper if you can't pay your taxes and threaten you with foreclosure notices. Everything is this poor county is so overrated and overwhelming. Will help ever come? I've worked since I was a teen and thankfully have a good job, but it's not enough, even in this POOR county. With golf clubs and prisons, I thought more revenue for the citizens would be generated here. Down and out in BERTIE CO.
  • by History Stident Location: NC on May 5, 2011 at 09:23 PM
    Rebuttal to - Tell me??!! on May 5, 2011 at 10:24 PM in reply to History Student How many FORMER and/or PRESENT republican politicians have gone overseas and brought back a prisoner from a foreign country??!! NONE!!!!!!! - Not True President Nixon a Republican did it in the Vietnam War in 1973 he brought back all American prisoner from a North Vietnam in the war. President Nixon did not have to overseas to free our Americans
  • by Teresa Location: Greenville on May 5, 2011 at 06:34 PM
    I don't understand why the President does not do something about the gas prices. If he could fix that, he'd be a shoe in for 2012!!!
  • by dan Location: gvegas on May 5, 2011 at 03:06 PM
    This news story runs counter to what I heard on the radio today, gas futures dropped like a rock and analyst are saying we should see a 25cent drop in the next two weeks, I like many of you wont believe it til I see it!!
    • reply
      by Greedy Old People on May 5, 2011 at 04:48 PM in reply to dan
      Do the oil companies know this??? There is no logical reason why these prices are going up every day, in some places every 2-3 hrs. If I didn't know better, I would believe it is all being orchestrated to slow the economy on purpose. The corporate crooks never cease to amaze me with their greed.
  • by History Student Location: NC on May 5, 2011 at 02:07 PM
    The worst American of all time (currently), Jimmy Carter, Not Obama yet? The Dem Ex Pres. is out to spew more lunacy guaranteed to set a new low for democrat stupidity! Every time Carter opens his mouth it is to kiss the rear end of some world thug or tyrant and criticize America. Carter has been a national embarrassment since his disastrous presidency and keeps digging a hole deeper. He has set the standard for mindless democrat liberal politics that sadly is being perfected by President Hope n Change today. Last week, on a ‘peace mission’ to North Korea, Carter said he is mad at the United States and South Korea for cutting off free food for the starving millions under the iron fist of Kim Jong-Il. Carter said America should send food supplies without conditions to North Korea! Imagine that! North Korea who started a war in the 1950's. After North Korea murdered South Korean soldiers by sinking a military vessel and then used artillery against South Korea, Carter has the stupidity to demand that South Korea and America feed the savage, repressive government run by a reclusive madman! It is incomprehensible that anyone can be that ridiculously stupid or have that much hatred against his country. Especially a former US President. If Obama gets elected in 2012 will he go on " The Hate America World Tour " again?
    • reply
      by Tell me??!! on May 5, 2011 at 07:24 PM in reply to History Student
      How many FORMER and/or PRESENT republican politicians have gone overseas and brought back a prisoner from a foreign country??!! NONE!!!!!!!
      • reply
        by I'll tell you on May 6, 2011 at 12:16 PM in reply to Tell me??!!
        Ronald Reagan used Navy SEALs TO captured the murderous hijackers of the Achille Lauro in October 1985. SO THERE IS ONE AND A REPUBLICAN AT THAT.
  • by futures traders done it to us on May 5, 2011 at 12:50 PM
    as of this post, gas is down 24 cents per gallon on the NYSE. Now, see what happens at your local gas stations!!!
    • reply
      by Rusty Shackelford on May 5, 2011 at 01:36 PM in reply to futures traders done it to us
      The radio this morning said the cost of a barrel of oil has dropped 6% since last week, but gas has still been going up...
  • by Grumpy Location: Outerbanks on May 5, 2011 at 11:51 AM
    Was 3.79 for regular at Setos in Kitty hawk yesterday. Thought gas was most expensive at the beach.
    • reply
      by Sam on May 5, 2011 at 01:49 PM in reply to Grumpy
      Luckily we don't have to pay as much as the rest of N.C. when it comes to gas prices. Maybe that's making up for the high taxes lol. Luckily my work is only 5 minutes away from the house, but my wife has to go back and forth between Kitty Hawk and Elizabeth City which eats quite a bit of gas up. That's why we ended up living in Kitty Hawk instead of Nags Head.
    • reply
      by Ken on May 5, 2011 at 08:24 PM in reply to Grumpy
      Last week when I was at Nags Head the gas there averaged about 10 cent per gallon lower than everywhere on the mainland. I guess not all beach prices are high. Now the food prices are another thing.
  • by ibxer on May 5, 2011 at 10:53 AM
    Gas prices were 12 cents higher when Bush was in office so it obviously has nothing to do with who is president. With globalization our drop in demand will barely impact prices. England just went up to $9 a gallon.
    • reply
      by Obama Snake Oil Co on May 5, 2011 at 11:43 AM in reply to ibxer
      Back the boat up, when Bush was president, liberals fumed that gas prices were his fault. Bush said drill for oil at Anwar, prices dove as a solution. Obamas solution, buy has from Argentina, in fact, give them 2 billion dollars to drill. Is that that globalization you mention? England pays nearly half of their gas in taxes too...you ready for that? There is no globalization, there is a socialist ploy for a New World Order where Billionaire George Soros is master. If you don't believe me, google it. He also supports Obama and has stayed at the Whitehouse. Beck came down on him and now Soros spends millions trying to get Beck off the air for using free speech. Obama is just milking the oil prices until just before election when he lifts the drillin moritorium on oil. Then prices will fall. Mark my word, this will happen. In the meantime, just pay the price for Obamagas, its the cost of not drilling on US territory...
      • reply
        by Your Tin Foil hat tight!! on May 5, 2011 at 01:10 PM in reply to Obama Snake Oil Co
        How will you keep up with all the conspiracies now that your idol(Beck) will be kicked off Fox!!?? I bet you STILL do not believe man landed on the moon. The price of gas will go down next week, because of the price of crude is going to continue to drop. Keep an eye on Brent Crude, which is a better gauge of what gas prices will be. When the jobs report comes in tomorrow (for April), and shows continued job losses, gas will go down. What will you say then???? You probably won't say anything about the drop in prices, but will get on the joblessness. THANK BOTH PARTYs!!!
      • reply
        by No One on May 5, 2011 at 08:29 PM in reply to Obama Snake Oil Co
        Let's not forget that Hurricane Katrina happened when Bush was pres....immediately after that is when prices jumped drastically due to pipeline and refinery problems.
    • reply
      by Sam on May 5, 2011 at 01:38 PM in reply to ibxer
      IF gas was 9 dollars a gallon then just about nobody could be able to afford to go to work unless if they worked from the house.
WITN

275 E. Arlington Blvd. Greenville, NC 27858 252-439-7777
Copyright © 2002-2016 - Designed by Gray Digital Media - Powered by Clickability 121305019 - witn.com/a?a=121305019
Gray Television, Inc.