Moving the goalposts: $4 gallons of gas will be the "tipping point"
Last November, the Automotive Aftermarket Industry Association (AAIA) released the results of a poll that asked Americans how higher gas prices were changing their driving habits. The majority (60 percent) said the cost of gas was having an impact on how they drive, while 30 percent expected more changes when $4 gallons of gas are the norm.Last week, the AAIA followed up with another survey on the same topic. The main difference is that the $4 level - something the president seems to be working hard to keep in the news - is now seen as the "tipping point" for more people. 65 percent told the AAIA (actually, the Opinion Research Corporation, which conducted the survey) they would "dramatically change their driving behavior" when $4 a gallon gas arrives. Read more details after the jump.
All this begs the question: what is the real limit? Is $4 or $5 really the Rubicon of changing driving habits? I still think it's not the actual price of gas at the pump, but how soon we get there. It seems like a 10-cent-per-month increase will be swallowed along with the general price inflation and weakening dollar. But have the price of gas shoot up $1.20 overnight (and then stay there for a year) and you'll see some changes. Thoughts?
Press Release:
$4 a Gallon Gasoline Will be Tipping Point for Most Consumers
Keeping the Car Running Better and Driving it Less is the Trend
BETHESDA, Md., Feb. 27 /PRNewswire-USNewswire/ -- If gasoline prices hit $4 per gallon as many economists predict, an estimated 65 percent of American car owners say they will dramatically change their driving behavior, according to a study commissioned by the Automotive Aftermarket Industry Association (AAIA).
"While a third of consumers claim they already changed their driving behavior by curtailing driving or maintaining their vehicle better when gas prices reached $3 a gallon, the real tipping point is $4 a gallon," said Kathleen Schmatz, AAIA president and CEO.
According to a survey conducted by Opinion Research Corporation for AAIA, 91 percent of drivers are driving less and 75 percent are maintaining their vehicle better because of rising gas prices. Other specific behavioral changes were carpooling (31 percent), purchasing more fuel efficient vehicles (30 percent) and making greater use of public transportation (24 percent).
For more information on the survey, e-mail Rich White at rich.white @ aftermarket.org or call 301-654-6664.
For more information on tips and advice for simple vehicle maintenance and care to improve gas mileage, contact the Car Care Council at http://www.carcare.org/.
About AAIA
AAIA is a Bethesda, Md.-based association whose more than 23,000 member and affiliates manufacture, distribute and sell motor vehicle parts, accessories, service, tool, equipment, materials and supplies. Through its membership, AAIA represents more than 100,000 repair shops, parts stores and distribution outlets.
[Source: Automotive Aftermarket Industry Association]
Reader Comments (Page 1 of 1)
Dave 5:46PM (3/02/2008)
Hmmm.
15000 miles per year
25 mpg
$4 per gallon
Thats $2400.
The average car now costs over $28,000. http://www.motortrend.com/features/auto_news/112_news030430_ave/index.html
And comprehensive insurance costs at least $1000 per year. ($1800 in Rhode Island)
And property tax costs about $1000 per year.
For a new car buyer, $4 gas is still a minor piece of the puzzle.
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steven 6:34PM (3/02/2008)
So a VERY few years back when it was $1.50 a gal, you could use the difference to pay your car ins for the year or your property tax (not mine). NOW think about it. That IS a chunk outta of most folk's monthly budgets. Now consider a two worker family and @ $4, the cost of gas can get into in the $5000-6000 range per year(yes, combined the spouse and I drive to and from work, drop/pickup kids day care, & and drop/pickup kids at school totaling about 150 miles per day). I liked it better when it was less than half that.
Come to think of it, how many people complain that they pay too much in property tax or car insurance at your $1000 a pop number? Maybe you and Dad can get a room.
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Bill 6:41PM (3/02/2008)
$4 gasoline/$4.50 diesel is fine as long as I have some choices in turbodiesel vehicles, which I don't for another year or so (only VW this year, and they will sell out quickly)
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John Harlan 7:13PM (3/02/2008)
The shift away from petro based energy has begun and has started to accellerate. It doesn't take a genious economist to tell us that $4/gal fuel will increase supply and decrease demand. What does that mean? It means petroleum is like whale oil used to be and now socially responsible people, world wide, hate oil and our dependence on it, and are planning their getaway so to speak.
Breakthroughs in alternative energies are in the news almost daily. This is the beginning of the end for oil, which will rapidly become a minor player in the first world.
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Dave 7:20PM (3/02/2008)
Steven-
My point is that for people who buy $28,000 brand new cars, $4 is not the tipping point.
$4 gas has a greater effect on those who can't afford new cars.
So, we havent reached a tipping point in terms of consumer new car choices.
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Dad 9:08PM (3/02/2008)
More experts just making noise (what else is new???).
In EU, where fuel prices are much much greater, the roads are full of cars and just like the USA, almost all have one person. And in the EU, lots and lots of high performance cars burning lots and lots of fuel.
I doubt 5 gallon fuel will make any lasting changes in "habits". At least habits that we can measure other than self reports (very unreliable) of how folks have "changed". Self reports are full of bias.
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Bob 10:02PM (3/02/2008)
People are maybe complaining about fuel prices but they are still driving large vehicles an usual. Fuel prices will have to go up $1-2 before people really cut back driving and drive more fuel efficient cars and trucks. We will still be using gasoline for the next 20 years as alternatives just don't do what petroleum can do.
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gsolman6 11:34PM (3/02/2008)
Dave:
According to the data I have the average new car makes 20 mpg in the real word.
Also many people never buy new cars but 2nd, 3rd or 4th hand vehicles for a fraction of $28k.
Plus in many states like Texas there is no annual property tax on vehicles but only a sales tax at purchase.
And yes there are people that pay less than $1k/year for insurance like the used car people mentioned above.
When you combine the higher costs of gasoline with the higher costs of energy for your home and higher prices for goods b/c of increased transport costs it really is much more significant than you seemed to indicate.
The real world data I have for Central Texas indicates that from 2005 to 2006 traffic counts in our area were down 6% despite a population increase of ~3%. I expect to seem more of the same when the 2007 data comes out from the Texas DOT.
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Lad 11:56PM (3/02/2008)
Notice how many hybrids are on the roads? The first production Tesla roadster is running the roads daily and soon they will become a common sight on the California roadways. "Volt" will be introduced in 2010 along with "Whitestar." What does this tell you? IMO it says we are transitioning to electric drive cars and that transition will accelerate rapidly once underway. I think there are a lot of Americans holding on to their old cars and waiting for the more efficiency cars to come out before they buy a new car. I'm ready to buy but I fix my own so I'll wait for one with an electric drive line.
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Chris Carpenter 1:08AM (3/03/2008)
eh ehm...we're forgetting someone. Don't forget the poor! Upper middle classers who are interested in muscling the US economy away from fossil fuels or gas guzzlers forget that the persons who are scraping to get by in service industries cannot afford a prius or next gen hybrid. Who drives that Tahoe that was soooooo not cool after you got your Prius? Do all the gas guzzlers just go away once those who can afford it jump ship to higher fuel economy? Heck no - they go straight to car auctions and get bought up by the same folks who might actually use a 4wd for its intended purpose while hauling handiman supplies to your place to fix the stuff that you don't know how to fix or don't want to fix. So, who ultimately gets hurt by the $4/gal scenario? Not your dear old govt and not the automakers...it's the poor. We need real solutions for energy efficiency that address retroactive problems and future problems...not just a shiny new hybrid as carbon pennance that says, "hey, at least I'm driving a Prius."
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frank78 1:15AM (3/03/2008)
Sebastian is correct in the question being how quickly we get to $4 gasoline as to whether habits change quickly or not. The quicker the jump, the quicker the changes.
No matter what, you'll see some extra Civics and Focus cars on the road this summer.
Of course the real crappy thing is how the cost of oil reflects prices in all sorts of goods. Welcome to the 1970s folks. Stagflation lies ahead.
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jake 4:27AM (3/03/2008)
@Chris Carpenter
Say what you want about excluding the poor in the current rush to more efficient cars, but they will have to wait until such cars reach the used car market; there's really not much that can be done there. It was a problem I have considered before too, that there is a fairly big population that doesn't own a new car nor plan to own one and that population will take while to replace those cars too. Then there's also the consideration whether new cars will impact the environment more solely because of the energy and resources spent producing the car.
More on topic with your question is that they will have to find a used car with better mileage; most likely by switching to a smaller car, or even more likely is that they will just have to drive less because replacing the car would likely be too expensive.
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ug 6:41PM (3/03/2008)
There are plenty of fuel efficient small cars for the poor to drive. They don't have to get all the leftover SUVs. There is, however, a dropoff after about 35mpg in gas efficiency. At some point gas will be expensive enough that just downsizing your vehicle won't be enough. You'll have to drive less. Really, cars like the Volt may wind up being too little too late.
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jim 8:02AM (3/03/2008)
For many drivers making significant reductions in gas consumption is impossible in the short term. The person who bought a house in the exurbs because it was cheaper and now commutes 80 miles round trip is likely stuck, due to the drop in home values and the possibility home prices near the job are higher, moving isn't likely and buying a cheaper to operate vehicle maybe beyond the budget. And what if the vehicle in use is already reasonably efficient?
It is going to take 10-15 years for the movement to fuel efficient vehicles to be successful and we really haven't started yet, in a meaningful way. Hybrids and other alternatives are promising but to this point have only a very small marginal effect.
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eliot 7:22PM (3/03/2008)
Its not the price of gas that bothers people, its more how fast it moves. if it goes from $2/gallon to $4/gallon in 2 years thats no big deal, if it went 2-4 in a month and stayed there for 2 years you'd see many people change their habits.
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Student Driver 2:37PM (3/03/2008)
Hmm, we had a Grand Cherokee in 2001, and $1.75 was the "tipping point" for us where it got little use. At around $2.25, I stopped driving an hour for mountain bike rides as the Impreza 2.5RS would get around 22-25mpg with a bike on the roof.
Switched to a Fit, and just in time for me to start going further for bike rides gas will go $3.50-$4 a gallon. Awesome.
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Brian Beecher 5:08PM (4/09/2008)
And we still continue to do nothing to reduce auto dependency. How come?
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Chris Carpenter 2:48PM (4/18/2008)
I must admit that I snicker a bit when we make edicts about what cars that poor should purchase and how much they should drive. Many of them are very limited in their options because of...well duh...money! If they drive far, it's highly likely it's from one low wage job to another and back to the house/appt that they can barely afford. Additionally, don't be that guy that tells your handiman that he would be better off driving a 1985 Honda CR-X because of the gas mileage when you know full well that he has to haul all of the crap several miles to YOUR place to fix the stuff that YOU can't/won't fix yourself. Elitist crap. Yuppies always have a good solution for the poor - if they would just...their lives would be less, well, poor.
What I am suggesting is that 1. we make too many cars (more than are needed to sustain the country's need), 2. the cars that are currently in existence would benefit from an affordable retrofit for fuel efficiency (it's out there, just not affordable because it's not mass produced) 3. it needs to be more affordable to upgrade the car you have than to get a new one (duh) 4. drive less IF you can 5. most greenies have NO IDEA where their last 4 cars are and they don't care because it is no longer their problem (they have the hybrid now, so their sins are forgiven).
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