Drivers start to cut back on gas as prices rise

[liberal N proud]

NEW YORK — Soaring gas prices are starting to take a toll on American drivers.

Across the country, people are pumping less into the tank, reversing what had been a steady increase in demand for fuel. For five weeks in a row, they have bought less gas than they did a year ago.

Drivers bought about 2.4 million fewer gallons for the week of April 1, a 3.6 percent drop from last year, according to MasterCard SpendingPulse, which tracks the volume of gas sold at 140,000 service stations nationwide.

The last time Americans cut back so much was in December, when snowstorms forced people to stay home.

Before the decline, demand was increasing for two months. Some analysts had expected the trend to continue because the economic recovery was picking up, adding 216,000 jobs in March.

"More people are going to work," said John Gamel, director of gasoline research for MasterCard. "That means more people are driving and they should be buying more gas."

Instead, about 70 percent of the nation's major gas-station chains say sales have fallen, according to a March survey by the Oil Price Information Service. More than half reported a drop of 3 percent or more — the sharpest since the summer of 2008, when gas soared past $4 a gallon. Now it's creeping toward $4 again.
http://www.msnbc.msn.com/id/42530999/ns/business-oil_an... /

[hlthe2b]

1. When we have record unemployment, that seems to follow...

Sigh....

[RUMMYisFROSTED]

2. Decreasing demand means decreasing prices!

:woohoo:


Because increasing demand meant increasing prices!

[liberal N proud]

3. The explanation will be the inverse

The prices will have to go up because demand is down.

You forget this new world we live in.

[coalition_unwilling]

5. Not necessarily. Increasing prices will decrease quantity demanded and that

decreased demand may tend to decrease prices. But what may also decrease prices is a double-dip recession, as $4.00/gallon gas (and $112/barrle oil) cools the economy down across the board.

[RUMMYisFROSTED]

7. Trust me. I get it.

[MadHound]

4. And thus the economy will slide backwards

Fewer drivers on the road, increasing inflation, less tourism, fewer truckers on the road, all this and more will ripple through the economy, swamping it just as it was barely getting its head above water.

[gratuitous]

6. I submit there's quite a bit of elasticity built into most people's driving habits

This very thing happened a couple of years ago when the two Texas oilmen in the White House let the price of gasoline spike for their pals in the industry. At that time, people made choices about their driving habits, and cut back on their consumption. An unintended consequence then was that people (in my observation) also began examining their consumer habits as well, not just driving. There were any number of business people fretting that the public wasn't quite so interested in frills and gewgaws that ate up disposable income. There were some pretty bleak holiday sales at that time.

The problem, from the point of view of our corporate overlords, is to finesse obscene profits for oil companies while keeping consumers interested in mindless consumerism. The plot goes sour when people begin re-evaluating their spending habits from A to Z, instead of just how much they drive. This time around, though, it appears that prices at the pump aren't being goosed just for the sake of higher oil company profits. That could mean trouble for the manufacturers of marginal goods.

[taterguy]

8. I'm a mindful consumer and I'll probably spend less money on things other than gas

A significant shift of wealth distribution to oil companies will be bad for everyone, except oil companies.

There are plenty of not-so corporate overlords that will be hurt. Sales will probably decline at Mast General Store, and they give employees who bike to work extra benefits. That's just the first example I thought of. I'm sure there are countless others.

[Johonny]

9. This summers word of choice will again be "Staycation"

at current prices summer dollar towns are going to get hit hard.

[Sherman A1]

10. Yup!

MIght take my two week road trip this Fall and simply stay home or skip it altogether and work through it, taking the vacation payout next year. We will see, I had hoped to go to Atlantic City and tour PA historical sites, but that might just be out the window.

[liberal N proud]

11. For us it means doing less on vacation

Sitting on the beach more, or by the hotel pool. Staying in cheaper motels in route.

Yeah, the tourist dollars fall much shorter.

Our spring break trip has already turned into visiting family, no vacation spots this year.

[_ed_]

12. It happens every year around this time

Collusion among the five or so largest oil companies is the only possible answer.

[SoCalDem]

13. At some point it becomes impossible. People have to get to work

:(

[Gin]

14. I bet the oil companies will have record profits again for the

quarter....this isn't about supply & demand...it's speculators.

The price will go down when there are hearings and wall street gets nervous....just like 08.