Despite higher gas prices, Americans remain undeterred
Even though oil prices have risen 30 percent in the last year, the United States' gusto for gasoline has not been shaken.
"I don't like gas being this expensive," said Paul Kaesberg, an oncologist at the University of Wisconsin Hospital and Clinics in Madison who routinely pays $1.90 a gallon, or 41 euro cents per liter. "My driving is integral to my job. It's integral to my pleasure in life. I won't cut back on that. I might cut back on other things."
Kaesberg, whose 2004 Acura sport utility vehicle gets 18 miles to the gallon, or 7.6 kilometers per liter, is typical of consumers who started the summer with the shock of $2-a-gallon gas, but who resolutely kept driving.
Over the Labor Day weekend, for example, about 28.7 million of the 34.1 million Americans traveling more than 50 miles from home were expected to be driving, a 2 percent rise from last year, according to AAA, formerly known as the Automobile Association of America.
Gas prices in the United States remain extraordinarily cheap compared with prices in Europe and elsewhere. But the U.S. economy has nonetheless felt the impact of higher energy costs.
Many companies, including airlines and trucking fleets, have started tacking on surcharges to compensate for higher fuel costs for their services, effectively passing on the costs to consumers. That, in turn, has contributed to spurts of inflation over the summer. Manufacturers and retailers say higher energy costs remain a threat, even as manufacturing activity is somewhat robust.
Some symbolic shifts in buying practices have also cropped up. Consumers are buying fewer Hummers, the large, military-style vehicles built by General Motors, while sales of hybrid vehicles are climbing; recreational boaters are opting to share boats with friends instead of using two small vessels for an outing. But for the most part, Americans are not altering their fuel-consumption habits as they pay some of the highest prices ever charged in the United States for gasoline.
Purchases of items other than fuel appear to be flagging, however, which is a familiar development during periods of rising energy prices. On Thursday, retailers reported that sales in August had risen 1 percent, a weaker-than-expected gain, and companies including Wal-Mart warned that earnings would also fall short of expectations. Still, such figures suggest that Americans are forgoing purchases of everyday items so that they can continue to drive.
The four-week average for gasoline demand for the week ended Aug. 27 was 9.42 million barrels, essentially unchanged from a year ago, according to the Energy Information Administration.
Part of the explanation is that gasoline prices declined during the summer, to a national average of about $1.86 a gallon, from a record of $2.05 in May, while frenzied trading in financial markets pushed the price for a barrel of oil to nearly $50 from $40.
Prices dropped over the summer because refineries in the United States produced enough gasoline to meet demand. "I don't think we're going back to $50 without a big supply disruption somewhere," said Juha Laiho, a Houston-based oil trader for Fortum, a Finnish oil company. "It's logical for gasoline to pull back a bit."
Gasoline at $1.86 a gallon remains about 10 cents a gallon more expensive than at this time last year, according to the Energy Information Administration. Still, Rebecca Lindland, a senior analyst for the automotive industry at Global Insight, a research and forecasting consultancy based in Waltham, Massachusetts, estimates that gasoline prices would have to climb to a nationwide average of $3 a gallon for at least six months to alter consumer behavior.
But seeking out energy-efficient vehicles still seems to be the exception rather than the rule. Sales of recreational vehicles climbed 14 percent in the first half of the year from the same period in 2003, according to the Recreation Vehicle Dealers Association in Fairfax, Virginia.
Some parts of the economy that depend heavily on oil are having a hard time. Fuel is expected to cost airlines $6 billion more this year than last year. They are doing everything from taxiing out to the runway on one engine to cutting the amount of reserve fuel they keep on aircraft in case of delays. Fierce competition, however, has prevented airlines from making fuel surcharges stick through ticket price increases.
The New York Times