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$4 a gallon? For many, it's not a gas
Consumers are being forced to rethink how they shop, vacation and get to work
Sunday, May 04, 2008

America has had enough. Or at the very least, California -- the country's largest motor fuel market, the traffic jam capital of the world, where you need to spend an hour on one freeway or another to get just about anywhere -- has had enough. In January of 2008, Californians bought less gasoline than they did in January 2007. Much less. Fifty-eight million gallons less, in fact, a drop of 4.5 percent.

"In a world where little moves matter," said Tom Kloza, chief analyst with the Oil Price Information Service, "that is a sea change."

There may be no specific point where, suddenly, gas becomes a luxury instead of a necessity. But if the sea change began on the West Coast, the wave is now lurching eastward. Economic data, auto sales numbers and anecdotal evidence suggest that gas prices have now reached the level at which many Americans are being forced to rethink how they shop, vacation and get to work.

Terry O'Connell, queried while gassing up at a Sunoco station in Mt. Lebanon, said she thinks twice about every trip she makes, every errand she runs. "How much can I do in one loop?" she asks of herself.

The 16 gallons she pumped into her Chrysler minivan came to $58.26. "And it is just going to go up," said the 48-year-old mother of four. "That is the worst part."

As a result, she's weighing vacation plans, and the number of trips she takes to see her grown children, against the price of gas. "I might start doing shorter trips," she said.

It seems lots of people might start doing the same. Some do already. Who can blame them?

Nationally, average gas prices are setting new records each week, exceeding the inflation-adjusted record of $3.40 a gallon, set back in 1981. (As of last week, the national average was above $3.60 a gallon, and slightly higher locally.)

In April, U.S. truck and SUV sales dropped 17.4 percent over the same month in 2007. And the Pennsylvania Turnpike is reporting lower traffic numbers than are typical, said Carl Defebo, Turnpike spokesman.

Year to year, Turnpike traffic tends to grow 2.5 to 3 percent. But through four months of 2008, it's up only 1 percent on the ticketed portion of the road -- an increase of half-a-million vehicles, but less than the 1.2 million to 1.5 million increase that would've been customary.

"It looks like we're on course for a minor kind of a dip," Mr. Defebo said. "I think what's going to be tell-tale here is June, July and August. That's when the discretionary travel occurs. ... There may be some magic cutoff-- $3.85 may be the point where people say, 'Forget it, I'm not going to the beach.' "

One man's cut-off point is another's inconvenience, Mr. Kloza says.

In wealthy New York suburbs, gas -- whether it's $3, $3.50 or $4 a gallon -- still eats up less than 2 percent of disposable income. But in poor, auto-reliant regions of the Deep South, gasoline now accounts for 10 to 15 percent of disposable income. And for most Americans, $3.60 for a gallon of regular unleaded is enough to cut into other areas of the family budget -- groceries, eating out, credit card payments, vacation.

"My husband's job is in Wexford, he's been riding his motorcycle to work to save gas instead of driving his car," said Terry Owens of Squirrel Hill. Their getaways to Sandy Lake, near Conneaut, Crawford County, used to be a two-car trip, but "now we only take one vehicle there."

Some might not take a vehicle at all.

"We have more people who are comparing [driving versus flying], and typically for a family of four it's still cheaper to drive, but for business travelers certain deals might make flying cheaper than driving," said Bevi Powell, spokeswoman for AAA East Central, which includes Western Pennsylvania and parts of Ohio, New York, West Virginia and Kentucky.

Addicts are known for swearing off the stuff, then relapsing. Will Americans resume their gas-guzzling ways once -- make that if -- gas prices come down, and the economy picks up?

Or are the prices a national wake-up call, bringing about some permanent lifestyle changes?

The baby boomer factor

Some lifestyle changes are already under way, and they would seem to be permanent. Baby boomers, for instance, are entering their retirement and Social Security years, and thus will be exiting their prime commuting and car-driving years. That trend, obviously more demographic than price-related, means the generation that helped make the two-car family an American staple will soon be taking their cars off the road.

"Most driving is done by those between the ages of 26 and 55," the U.S. Energy Information Administration said in its April 2008 gasoline consumption forecast. "As the baby boomers [age], the shifting demographics are expected to slow the growth in average per capita miles traveled."

The dramatic shift away from trucks and once-trendy SUVs seems, if not permanent, at least a longer-term type of change, a three-, four- or five-year investment for many.

At Wright Automotive Center in Pine, sales of gas-friendly small cars are booming.

"It's hard to get the supply of the [Hyundai] Elantras that we need," said Ken Sammons, sales manager at Wright Automotive. "Nissan Sentra and Versa sales are really going very well. ... We're definitely seeing a big change in trade-ins because we're getting a lot more big SUVs and trucks. People are downsizing and the values on those trade-ins'' are falling accordingly, he said.

Since they began their more-or-less steady climb after Hurricane Katrina in 2005, analysts have been wondering when the rising gasoline prices would result in lowered consumption. And for years it didn't happen. But this year, the Energy Information Administration is forecasting that American gas consumption will actually fall, the first annual decline since 1991, according to Business Week.

Does that mean commuters are switching to mass transit? The Port Authority of Allegheny County hasn't noticed any recent increase in ridership (possibly due to last year's fare increase), but nationally, mass transit ridership rates have hit a 50-year high, the American Public Transportation Association says. Annually, public transportation ridership is said to be increasing at a rate double that of population increase.

There are still lots of unanswered questions. Are Americans consuming less gas because the economy has been in the dumper? (It's not unusual, after all, for gas consumption to fall during recession-like periods.) Or is the economy poor partly because gas prices are so high, and people can't afford to spend in other ways? Is this the perfect storm of high price, environmental consciousness and aversion to foreign oil, or will people rush out and start buying SUVs again if gas dips below $2? How long will gas prices have to remain high to radically change the way we drive -- the axiomatic "tipping point"?

"I would speculate there is a point at which traffic is going to be measurably impacted," and $4 a gallon might just do the trick, said Mr. Defebo, the Turnpike spokesman. "Psychology is definitely at play here when it comes to consumer habits."

At least, it's at play when it comes to the habits of one Gary Coleman, who was pumping gas at a BP station in Squirrel Hill:

"I only get a half-tank at a time. It's a psychological thing. It makes me feel like I'm saving money, even though I'm not."

His personal tipping point?

"When the price hits $5 a gallon," he said, "I'll think about driving less."

Bill Toland can be reached at btoland@post-gazette.com or 412-263-2625. Donald I. Hammonds, L.A. Johnson, Sally Kalson and Cristina Rouvalis contributed to this report.
First published on May 4, 2008 at 12:00 am
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