A funny thing happened on my way to the gas station—I lost a dime!
While that might not seem like much of a concern, when it costs a dime more—per gallon—for motor fuel, it seems that with all the traveling I do around Texas, my pocket continues to get lighter. It’s almost enough to make me want to walk instead of drive. “Almost” is the operative word. Of course, I’m not unique in this respect.
The high price we are paying at the pump has had different effects on US motorists. Some seem to be continuing their pattern of driving as much and as often as they desire. Others are trying to find ways to conserve, such as organizing their driving to make several stops along the way and get everything accomplished in one outing or increasing efforts to carpool.
With the demand for gas-guzzling vehicles rapidly falling, some owners are selling or trading them in on smaller and more fuel-efficient automobiles. Many auto dealers now have large quantities of SUVs and pickups available, most with prime discounts offered through special promotions. Last month, according to Kelley Blue Book, it required more than 66 days to sell a used SUV, even with a 20% devaluation from normal expectations. During the same month in 2007, it took about 48 days to move the vehicle, and the average discount from the manufacturer’s suggested retail price was only about 7.8%. (Interestingly, however, it is a full-size SUV which has recently been gaining attention as one of the most fuel-efficient options available.)
Another change in behavior relates to driving habits. Many drivers have chosen to ease back a bit on the accelerator to get a few more miles to the gallon, a benefit of modern technology which has developed many vehicles to get optimal gasoline usage between 30 and 60 miles per hour (mpg).
In most cases, the longer drive time resulting from throttling back 5 to 10 mpg would probably not be significantly detrimental to one’s schedule, and it does keep those dimes in the pocket a bit longer. Airlines recently started this procedure, and while most passengers have not complained or perhaps even noticed it, the change is adding up to savings, even millions of them over time, for the airline industry.
While most Americans look forward to summer and the opportunities it affords for vacation travel, during the warmer months this year, there could be slight curtailments in plans involving automobiles. Some people are keeping family outings closer to home and others are foregoing them or delaying them in hopes prices will ease relatively soon. The main reason cited for these kinds of decisions is the pain motorists are feeling as they fill their tanks.
Estimates of peaks and the duration of elevated prices for fuel vary, but the US Energy Department has posited that a peak could come next month, which is good news for summer driving opportunities. With the ongoing upswing in oil prices, topping $126 per barrel as I write this column, it is highly probable that peak prices could climb above the projected national average and that the crest might come a bit later than now anticipated.
Oil prices have doubled over the past year, and gasoline costs have risen almost 65 cents compared to this time last year. As a result, some analysts believe there is a possibility that prices could hit the $4 per gallon mark, but most predictors are doubtful it will go anywhere near that level on a national average basis (it is already above that level in some locales).
When looking at average prices for the entire year 2008, the Energy Department places the amount per gallon at approximately $3.52 a gallon. It does not sound too bad considering what we are paying right now, but this cost is still approximately 71 cents more than the average for 2007.
With political tensions and the myriad challenges currently facing oil producers around the world as well as ongoing problems US refineries are confronting, it seems likely that the price of oil, and the resultant cost we pay at the pump for motor fuel, is likely to be higher than we would like for quite some time.