posted on Wednesday, January 16, 2008 8:32 AM
by
Jeremy RVARC
Demand for Gasoline Down Slightly
This story is almost a month old by this point, but deserves some attention:
Growth in gasoline demand has been slowing all year. In five of the last seven weeks, the amount of gas that Americans consume has actually fallen compared to the same time last year, according to retail sales data gathered by MasterCard SpendingPulse, a research report that tracks gasoline sales using MasterCard, other credit cards and cash purchases at approximately 140,000 service stations around the country.
If this drop was maintained, it would be the first time that such a prediction has actually come true - it's remarkable the resistance American drivers have had to changing consumption habits. Much the same kind of prediction was made when gas hit $1.50, then $2.00, then $2.50. At each of these arbitrary price points there has often been a flurry of hand-wringing and accusations of price-gouging, but the result has generally been drivers cutting other things out of their budget rather than cutting back on the driving.
I'm somewhat skeptical, therefore, that $3.00 (or $3.50 or $4.00...) gas will be the magical point at which there is a sustained drop in consumption. Without, admittedly, any evidence to support the assertion, I would guess that the drop mentioned in this article has more to do with changes in holiday buying habits - more online shopping rather trips to the mall. Indeed,
online holiday spending in 2007 was up 19% over 2006, while overall holiday spending was
tepid. If this is an indicator of how people were shopping in addition to how much they were shopping, it does not suggest, unfortunately, a sustained reduction in consumption.