Will Cheaper Gas Cause Increased Driving?

As oil prices plunge to well below $100/barrel, will Americans reverse all their fuel-efficient behavior learned from $145 oil seen in July? It appears that the economic crisis may continue where the energy crisis left off.

1 minute read

October 14, 2008, 1:00 PM PDT

By Irvin Dawid


"The sour economy is prompting (Americans) to stick to their new fuel-efficient ways, a pattern that is likely to hold across the country even if gas gets cheaper.

"There's been a sea change in people's attitudes in terms of gasoline consumption," said Michael Right, a spokesman for the auto club AAA in Missouri. "The economic situation is not conducive to spending more money on energy."

"Though gas prices dropped in August, Americans didn't return to their gas-guzzling ways. Gasoline demand remained an average of 1.9% lower than in 2007, weekly data from the Department of Energy shows. Last week, gas demand was off 5.5% versus last year..."

From SF Chronicle, 10/11/08:

"Oil sold on the New York Mercantile Exchange dropped $8.89 to close at $77.70 per barrel, its lowest price since Sept. 10, 2007.

California's average price for a gallon of regular is dropping about 2 cents per day, hitting $3.53 on Friday, according to the AAA auto club. The national average... is falling even faster. It dropped 5 cents overnight to reach $3.35 on Friday. That's still 59 cents more per gallon than it was a year ago."

"...some OPEC members have signaled they want oil to stabilize around $80 per barrel. But if the economy worsens, they may not get their wish."

Friday, October 10, 2008 in The Wall Street Journal

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