Price per gallon drives new behaviors

September 05, 2005|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Braedyn Woodring intended to quit her second job when her graduate classes picked up, she really did. But a sign from above changed her mind.

It said: Regular unleaded, $2.60.

And that was last month, when her paycheck for a part-time job covered half the weekly gas bill. At this point, prices are much higher.

There's now clearly measurable evidence that Americans are altering their lives because of fuel prices, subtly so far but still a first in a generation since shortages forced drivers to sit in line for hours to get their turn at the pump. And after the devastation of Hurricane Katrina last week, oil prices have risen even more, pushing gasoline costs and consumer behavior to new heights.

The average price for a gallon of regular gasoline - which has topped $3 in many places, including most parts of Baltimore - is up by about $1 in the past month. It's the unwanted icing on the cake after two years of steady increases.

"If you talk to anybody about the economy today, ... they'll tell you that these high gas prices are a real pain in the butt and that they're having to change their behavior in some way to cope," said Mark Vitner, an economist for financial services company Wachovia Corp.

There were examples of this in Baltimore on Friday when rumors of the hurricane's effect on oil supplies began to spread. Across the region, many drivers panicked after believing incorrectly that gas stations would close at 4 p.m. because of supply shortages. Long lines of cars formed around several gas stations as motorists tried to top off their tanks before state and local officials moved to quell the anxiety. And before Friday's rumors, many drivers were filling up frequently to beat the higher prices they knew were coming.

But for weeks before the hurricane, there were signs that gasoline prices were pushing people to change their habits.

For instance:

Federal tallies during the first half of this year found the smallest increase in miles traveled on the roads since the first half of 1991, when the country was in a recession. Account for the growth in driving-age Americans, and the average person traveled 35 fewer miles than in the first half of last year.

New registrations of large cars and full-size sport utility vehicles dropped more than a quarter in May from the same month in 2004, said the Polk Center for Automotive Studies. Some of that loss is the result of buyers downsizing.

Credit-card transactions at the pump have jumped to about 70 percent this year from 54 percent last year as drivers try to delay the inevitable, according to the National Association of Convenience Stores. "It is a switch-over behavior," said association spokesman Jeff Lenard. "The problem is, if they aren't paying off the balance in full, the gas" will end up costing them even more.

Gas theft this year is shaping up to be worse than last year, when it totaled more than $230 million. And last year was as bad as it has ever been, Lenard said.

Some folks are simply spending less on everything else. Wal-Mart Stores Inc. and Dollar Tree Stores Inc., both reliant on shoppers with tighter budgets, are blaming gas prices for their slowing sales.

"People are getting more and more angry and frustrated," said Jeff Martini, vice president of the Polk Center, who thinks these sorts of changes are just the start as prices continue to climb. "The theme coming through is, ... `Enough is enough - we're going to take action.'"

Some unaffected

Of course, examples of people not changing aren't hard to find. The spike in prices this summer hasn't increased use of public transportation, the Maryland Transit Administration said. It hasn't stopped boaters, the Marine Trades Association of Maryland found. Although it predicted that fewer people would travel over the Labor Day weekend because of higher gas prices, AAA Mid-Atlantic said the rising costs did not stop families from hitting the road in large numbers for vacations earlier this summer.

But even here, in one of the most affluent states in the nation, motorists are looking for ways to economize or cover the difference.

For Woodring, a 20-cent increase in a single week last month was the turning point. She originally planned to quit her job as a bank teller, which brings in $80 a month for two Saturdays of work, because she wanted more time this semester to study for two graduate classes in economics. Now she's expecting to stay on until the winter. She's even thinking about increasing her hours.

Gas was costing her $40 a week before the Hurricane Katrina-fueled increases, and what she'll have to pay in the near future is anyone's guess.

"I just don't want to mess up my budget," said Woodring, who lives in Olney and has a full-time job as a research assistant at Sage Policy Group in Baltimore. "I commute an hour to work, so gas is a part of my life."

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