If demand is down, why aren't prices?
The nationwide average price for a gallon of gas is now $3.53, and there's not much doubt it's going to hit $4 soon enough. But the Energy Department says gasoline demand is actually lower than a year ago. So what's going on? Ashley Milne-Tyte reports.
Gas prices over $4 per gallon are displayed at a Shell station in San Mateo, Calif., on March 13, 2008. (Justin Sullivan/Getty Images)
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KAI RYSSDAL: Oil traders played a little trick on us today. The futures contracts that're being worked on the floor of the New York Mercantile Exchange flipped from May to June this morning, so if you happened to notice that crude was a hair lower today, down under 117 a barrel early on, don't pay it no mind. Happens every time the contract turns over, but it's gas I really wanted to get you thinking about today. Nationwide, the average is now $3.53 a gallon, not much doubt it's going to hit $4.00 soon enough, but consider this. The Energy Department says, compared to a year ago, gasoline demand is actually lower now. Economists would call that a classic example of price elasticity.
From New York, Ashley Milne-Tyte reports it could be called something else, too.
ASHLEY MILNE-TYTE: Rather than call it a tipping point, you could look at this as a long, slow slide. It may have started last year. Troy Green is a spokesman for the American Automobile Association. He says the AAA's Michigan club has surveyed members about last summer's then record gas prices.
TROY GREEN: Three out of four of those surveyed said that they consolidated their shopping trips when possible. You had three out of 10 that said that they changed over and began driving a more fuel-efficient vehicle.
He says we'll know more when AAA reports next month on summer driving plans. Speaking of summer, Peter Yacewich, of marketing firm the Y Partnership, says high gas prices won't cause many people to cancel vacations, but he expects them to adjust their plans.
PETER YACEWICH: That means, again, typically staying a little closer to home, driving a shorter distance, spending a little less on other aspects of the trip beyond transportation.
But what about just getting around? The American Public Transportation Association says people are riding more buses and trains. Morgan Lyons is a spokesman for Dallas Area Rapid Transit. He says at times like this, Dallas drivers start hitting up the DART Web site to find out how to take a train to work.
MORGAN LYONS: We've seen nice growth in Web traffic about the time we see spikes in gasoline, and that is a precursor to a spike in ridership.
This February, he says, ridership jumped 14 percent over last year.
I'm Ashley Milne-Tyte for Marketplace.
