Escalating gasoline prices won't discourage summer driving

Gasoline prices have not impacted driving behavior as much as expected, despite the controversy surrounding US gasoline prices and their anticipated impact on summer driving habits. In the first 5 months of 2000, US gasoline use remained steady vs. the same period last year, said NPD Group, Port Washington, NY, in a special analysis of its Motor Fuels Index released Monday. Furthermore, says NPD, gasoline demand is not likely to slow down during the peak driving months of June through August.


High US gasoline prices in recent months have not caused US drivers to reduce their gasoline use as much as expected, says a market data analyst.

In the first 5 months of 2000, US gasoline use remained steady vs. the same period last year, said NPD Group, Port Washington, NY, in a special analysis of its Motor Fuels Index released Monday. Furthermore, says NPD, gasoline demand is not likely to slow down during the peak driving months of June through August.

During the first 5 months of 1999, the primary driver in the typical American household bought an average 13.3 gal of gasoline five times per month, for a total consumption of 66.5 gal/month. During January-May 2000, Americans filled their tanks an average of 5.1 times per month, consuming 13 gal at each visit. This is a per-driver demand decrease of only 0.2 gal/month.

"This stability in consumption comes even as the national average price of gasoline rose 32% January through May of this year compared to the same time last year," said NPD.

Larry Moore, president of automotive, petroleum, and convenience store tracking at NPD, said, "A consumer who purchases $10 worth of gasoline is buying fewer gallons per purchase compared to a year ago. But if that same consumer's driving habits don't change, those $10 transactions simply convert to more frequent fuel stops."

Driver behavior
Last year, US drivers paid an average $1.11/gal for all grades of gasoline during the January-May study period. This year, the average gasoline price for the period rose to $1.47/gal, and the average price for all grades reached $1.52 in May.

"Surprisingly, our data show drivers don't consume less gasoline when faced with higher prices in the short term," says Moore.

Despite recent oil production hikes, gasoline prices are expected to decline gradually, says NPD.

A "great deal of concern" exists that high prices will prompt consumers to cut back on summer driving and vacation plans this season, says Moore. But while people say they will cancel trips and drive less, gasoline consumption is not likely to change at all in the near future, he adds.

Moore says prices would have to remain at these levels for a sustained period before consumers would make the kinds of cutbacks seen during the 1970s energy crisis. Such behavioral shifts could include switching to more fuel-efficient cars, carpooling, and trip reductions.

In the short term, NPD says US consumers are more likely to cut costs by using less-expensive grades of gasoline. In January of last year, when fuel prices were much lower, 15.4% of drivers reported using premium unleaded. By May of this year, that number had decreased to 11.3%, indicating that as prices rise, premium use declines.

Although the number of gallons per purchase and the number of purchases per month continue to closely mirror last year's consumption values, usual unleaded premium consumers admit to using lower, less-expensive grades of fuel.

The NPD Motor Fuels Index is based on surveys of 220,000 consumers. The sample is demographically and geographically balanced to US Census Bureau statistics, says NPD. Data are collected monthly.

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