Gas prices curb American appetite for driving, SUVs

January 28, 2007|By Elizabeth Douglass | Elizabeth Douglass,Los Angeles Times

Two years of record-high gasoline prices have forced auto-crazed Americans to do something they haven't done in more than two decades: Drive less.

To the surprise of many economists, U.S. motorists changed their ways enough to cut the nation's per-driver mileage by 0.4 percent in 2005, ending a string of increases dating back to 1980, government data show.

Other reports over the last year on mass transit ridership, total miles driven nationwide, gasoline demand, vehicle sales and retail and restaurant spending reinforce the notion that U.S. drivers made significant - and in some cases, lasting - adjustments to offset steadily rising gasoline prices.

"In 2005 and into 2006, we did see consumers start to change their driving behavior," said David Portalatin, director of industry analysis at NPD Group Inc., which tracks consumer spending. "That's a very hard thing to change, because I've either got to change where I work, where I live, or what kind of car I drive."

It's a small but important shift for a nation that many believed was impervious to rising gas prices because drivers were unable or unwilling to rein in their gas-guzzling ways. Lofty energy costs have generated such concern that President Bush devoted a significant chunk of his last two State of the Union speeches to addressing the nation's oil addiction.

"The message is that price matters," said Daniel Yergin, chairman of Cambridge Energy Research Associates, a Boston-area consulting company that recently published an analysis called "Gasoline and the American People." The study highlighted the decline in per-driver mileage and a cooling appetite for the largest sport utility vehicles, among other things, and concluded that expensive gasoline was transforming "America's love affair with the automobile."

Even though pump prices have dropped substantially from their highs in 2006, "there's a greater sense of insecurity, and people don't want to be caught emptying their wallet at the gasoline pump," said Yergin, author of The Prize, a Pulitzer-winning history of the oil industry.

Oil companies, however, need not fret. A steady economy, growing population and longer commutes will keep U.S. gasoline consumption chugging along for years, despite the uptick in sales of fuel-saving hybrid cars and the growing use of biofuels such as ethanol.

While high prices cut into the expected growth rate, U.S. gasoline consumption nonetheless increased by about 1 percent in 2006 after staying flat the previous year. "The gasoline consumed since that August peak in gasoline prices is up nearly 2.5 percent versus the comparable time period a year ago," said Portalatin, the NPD researcher. "What it means is that consumers have a short memory."

Still, some experts believe drivers are reacting to the increasing volatility and the steady upward march of gasoline prices over the last few years.

After enjoying lower pump prices in 2001 and 2002, consumers saw the yearly average cost of gas jump by double digits in each of the next four years.

Another reason is that the nation's baby boomers are getting older, and many are approaching retirement age. Older drivers tend to drive less, especially if they are freed from a daily commute. Today, more than 14 percent of U.S. drivers are over 65 - nearly double the level in 1980, according to the study by the Cambridge energy research group.

And some consumers are increasingly driven to conserve fuel because of a growing uneasiness about the nation's addiction to oil, the instability of oil-rich countries and harmful climate effects.

All this has car companies rolling out new gas-electric hybrid vehicles and promoting fuel efficiency at every opportunity, a sign that those companies believe the public's yen for saving gas is not a fleeting fancy.

Automakers "are keeping in mind that this is a real issue, and it's a real problem for the American driver that they have to deal with," said Lonnie Miller, director of industry analysis at R.L. Polk & Co., a Southfield, Mich., company that tracks vehicle sales.

But Americans clearly have their limits when it comes to conserving fuel. One item that's definitely not on the to-do list: driving slower. Several states have boosted highway speed limits over the last two years.

"I'm surprised that I see people driving at 75 or 80 miles an hour on [Interstate] 680 out here," Chevron Corp. Chief Executive David O'Reilly said during an August interview at the oil company's headquarters in San Ramon, Calif. "If they drove at 60 miles an hour, they'd save 5 percent or 10 percent of their gasoline consumption."

Elizabeth Douglass writes for the Los Angeles Times

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