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Gas purchases plummet

Rising prices inspire Americans to conserve (finally!)

by Adam Stein – June 2, 2008

Gasoline consumption has long proved strangely impervious to shifts in the price of oil. No longer:

Gas purchases have taken a massive nosedive: “Demand fell 5.5 percent last week.”
Resale value of SUVs has plummeted: “There are far more truck-based SUVs being traded in than customers to buy them.”
Prius sales are setting new records: “Toyota has sold more Prius cars in the first quarter of 2008 than all other major manufacturers have sold hybrids combined in the same period.”
But drivers aren’t falling for the monster-truck hybrids: “Giving a four-wheel drive Tahoe a gas-electric hybrid engine raises fuel economy for city driving to 20 miles a gallon from 14…in a marketplace dominated by smaller hybrid models that can get more than 40 miles to the gallon.”
New York City bike shops are running out of bikes: “They’re all gone. It’s wicked.”
Los Angeles commuters have discovered the subway: “The number of passengers increased by more than 14% in the first three months of 2008.”
LA isn’t alone: “Transit systems in metropolitan areas like Minneapolis, Seattle, Dallas-Fort Worth and San Francisco reported similar jumps. In cities like Houston, Nashville, Salt Lake City, and Charlotte, N.C., commuters in growing numbers are taking advantage of new bus and train lines built or expanded in the last few years.”
U.S. driving miles took the sharpest one month drop in history: “11 billion miles less in March 2008 than in the previous March.”
And this drop in driving miles truly is historically anomalous:

It remains to be seen how permanent these shifts in behavior are. Adjusted for inflation, gas prices really aren’t all that high. They’re high, to be sure, but not that high. Typically what happens when the price of oil jumps is that consumers whine a lot, then get used to the new price, and then revert to their old behavior. A lot hangs on whether the price increase is sustained.

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Comments

1. Comment by Matt @ Jun 2, 2008 10 AM

I live in Philadelphia, and there was a big article about the calls to AAA for people that ran out of gas has doubled.

2. Comment by Aaron A. @ Jun 2, 2008 11 AM

Clandestine gas siphoning is also on the rise, which has led to a surge in purchases of locking gas caps.

I figured that drivers would respond eventually, but these things take time. First we have to realize that the problem won’t go away on its own, then we have to weigh our options, then we have to convince ourselves and our families that this change is acceptable and beneficial, and finally we can take action.

Why might this be different from, say, the late ’70s? Probably because credit cards and monster mortgages weren’t as widespread, so the average family had more of a safety net. If money got tight, they could cut back on some expenses, maybe put the wife n’ kids to work to earn a little extra money. Today, both parents are already working, which is all fine and good except that both paychecks are consumed by loan payments. A layoff or a spike in commodity prices becomes more than they can bear, and soon you see workers raiding their retirement accounts to keep up with daily obligations.

— A.

3. Comment by Owen Johnson @ Jun 4, 2008 4 AM

Boston, a city with an already solid public commuter track record, is also showing evidence of commuter behavior shifts. The MBTA saw a 5.5% rise in ridership in April. This rise was on top of already significant gains earlier in the year.

4. Comment by Cynthia @ Jun 4, 2008 8 AM

This is very hard, but it’s great news!

Wish more cities had better public transportation…

I’d have to walk about 2 miles to the nearest bus stop…

5. Comment by Ben @ Jun 4, 2008 9 AM

I think a lot of people forget that gas conservation isn’t much of an option for people who don’t live in a city.

I drive a small car already and I still have to drive all the time to get to work.

6. Comment by disdaniel @ Jun 4, 2008 10 AM

Ben says
“I think a lot of people forget that gas conservation isn’t much of an option for people who don’t live in a city.
I drive a small car already and I still have to drive all the time to get to work.”

Car-pool!

7. Comment by Jen @ Jun 4, 2008 11 AM

“Car-Pool”? I would never randomly get into a vehicle with someone I don’t know. Do you pick up hitch-hikers?

There are always going to be people who need to drive. Road travel is important to our country’s economy. The drops are good, but I’m ticked off that there aren’t more PHEV (Plug-ins) being offered and that these car companies are going to make us wait two years before we see cars that finally get serious about TRYING to conserve. How hard would it be for Toyota to offer a plug-in option? We’d end up with 100+ MPG on those cars! Some people wouldn’t even need to use a drop of gas in their daily commute with a plug-in.

8. Comment by Amy @ Jun 4, 2008 8 PM

Before you start jumping with glee over the plug-ins, please remember that they use energy too. Unless we turn all our electricity plants into renewable ones, the environment’s still going to suffer. Plug-ins are definitely good things, but not quite the complete solution to our problems.

And I LOVE the statistics in this article!! WOW!

9. Comment by Mark @ Jun 5, 2008 12 AM

Plug-ins are friendlier carbon-wise than most people realize. Most charging would likely occur at night during off-peak hours anyway. If battery technology hits the market that would allow a 300 mile range and sub-hour charging (it exists) and if the car makers ever built a plug-in hybrid capable of burning bio-diesel in a small constant-speed motor exclusively for charging the on-board batteries while traveling, that would be my dream vehicle. As long as its a 4-passenger hatchback.

10. Comment by Aaron A. @ Jun 5, 2008 11 AM

Jen (#7) said:
“Car-Pool?” I would never randomly get into a vehicle with someone I don?t know.

It doesn’t have to be a stranger. For a good part of this winter, I drove my mother to her job, then continued on to my place of business*. You may have a neighbor or a co-worker who’s interested in carpooling, but who is similarly apprehensive about getting into a stranger’s car.

If you can’t find anybody you trust enough to share a ride, oh well, that didn’t work out, move on to the next idea. Some of us honestly have no viable alternatives to single-occupant commuting. Many of us do, though, and when we follow through on those alternatives, we can reduce the congestion, pollution, and (at least hypothetically) expense of everybody’s commute.

— A.
* In warmer months, we each have bicycles and company-sponsored bus passes.

11. Comment by Edward Mangold @ Jun 6, 2008 7 AM

I will believe that high gas prices are being felt by the American public when I drive on I-25 and cease to see 10 percent of the motorists driving 75 to 85 miles per hour.
Ed Mangold

12. Comment by Jon Peltier @ Jun 9, 2008 12 PM

Do you have a link for the moving average plot (the last item)?

13. Comment by Adam Stein @ Jun 9, 2008 12 PM

Original figure here.

14. Comment by Jon Peltier @ Jun 9, 2008 1 PM

What’s interesting is beyond the couple months drop, is the year or so it’s been approximately constant. I don’t recall that we’ve been complaining about the price of gas for that long. Griping, yeah, but it didn’t hurt enough to cut back until very recently.

15. Comment by mark @ Jun 9, 2008 2 PM

I’m wondering if it hasn’t been that a lot of people have been absorbing the higher cost by using credit cards and they’re now at their limits.

16. Comment by Aaron A. @ Jun 9, 2008 3 PM

mark (#15) said:
I?m wondering if it hasn?t been that a lot of people have been absorbing the higher cost by using credit cards and they?re now at their limits.

Quite possibly, mark. Consider this CNN/Money article from May 2007:
Even though consumers are still tapping into their home equity to cover short-term hits to their wallets like the spikes in energy and gas costs, [Steve] Cochrane [Senior economist for Economy.com] said this will lessen as home price appreciation slows and lending guidelines tighten.

And just last month, Bloomberg reports:
U.S. consumer borrowing jumped more than double the amount economists forecast in March [2008], indicating a slowing economy is forcing Americans to accumulate credit-card and other forms of debt… Consumers are turning to credit cards after banks tightened standards for home-equity loans and other borrowing.

The peoples’ sudden discovery of public transportation is an interesting sign. Perhaps they’re looking at the debt they’ve acquired by trying to wait it out, and making some sort of meaningful change while they still have a choice.

— A.

17. Comment by Uncle B @ Jul 5, 2008 10 AM

But there is so much more to life once your focus is no longer on the ‘car society’. My values, buying patterns and my lifestyle have been changed profoundly since giving up my car. I now have more money left over at the end of the month, and can even bank some. The transition is upon us, America and it is a good and humane one!

18. Comment by mark @ Jul 5, 2008 10 AM

Since my last post, the local news has reported since gas went over $4/gal, projected tax revenues have dropped due to a reduction in gasoline sales. We have apparently found that pricepoint. I know my driving is a lot less than it used to be, and I like going places. It’s easier to merge into traffic and find a parking spot. I’ve gone back in time, it seems, except my vehicles are nicer and more economical than 10 years ago. If it gets any quieter on the street I may even feel safe when riding my bicycle again.