« When do recessions end? | Main | Keeping in mind the good numbers »
April 16, 2008
Are drivers changing?
One of the complaints we've heard about drivers is that despite record high gas prices, gas consumption continued at the same rate. But recent information suggests this is changing. What's happened? Listen
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"Indeed, in the last three months gas consumption is down one and a half percent from the same period a year ago. Now, this doesn't sound like a lot, but it's very, very unusual. Usually, we see gas buying go up year after year, quarter after quarter and so forth. Any quarter, for it to go down is a major change in attitude of drivers. And I think this reflects two factors. Of course, everyone is keyed in on the price effect, and I think consumers are beginning to respond to higher gas prices. They're reducing their driving. They're buying more fuel-efficient automobiles and vehicles. They're combining trips. And all that has now had an impact on gas consumption. The other thing is what economists call an income effect. The slow economy is pinching consumers' wallets, meaning that there's fewer dollars available to spend on gasoline. That's motivating consumers to try to cut down on gas buying. Whether this is a long trend, I think is going to depend on whether gas prices remain high, whether the economy remains in the doldrums. My expectation is that after we get out of this downturn or recession, we'll start to see gas consumption go up again."
Posted by Dave at April 16, 2008 08:00 AM