NEW YORK – For all their complaining as they pay $3 a gallon or more to fill up their cars, few American drivers have yet to reach the point of cutting back.
That’s the message from government statistics showing that demand for gasoline is only just starting to level off even as refinery outages and tight supplies have sent pump prices soaring by 43 percent since the end of January.
And brace yourself: experts say with gas already closing in on $4 a gallon in Chicago and San Francisco ahead of the peak summer driving season, higher prices could be in the cards.
“I drive 55 miles each way to work every day,” said Sandy Colden, of Medford, N.J., one recent morning while loading groceries into her Honda Pilot SUV. “So I really don’t have a choice, unfortunately.”
Colden’s not alone. Most Americans are locked into their driving habits, and can do little to alter their fuel-buying patterns when prices rise, experts say. For example, the number of workers with commutes lasting longer than 60 minutes grew by almost 50 percent between 1990 and 2000, according to Census Department data.
Weekly gasoline demand in April increased as much as 1.9 percent over to the same weeks in 2006 even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.
Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly – by about two-one hundredths of one percent, EIA figures showed.
Experts disagree over how high prices have to rise before consumers are shocked into driving less – at least temporarily.
“We might actually see some reaction at $3.50 (a gallon)” nationally, said Larry Compeau, executive officer of the Society for Consumer Psychology and professor of marketing and consumer psychology at Clarkson University in Potsdam, N.Y.
Lars Perner, assistant professor of clinical marketing at the University of Southern California’s business school, disagrees, saying the tipping point is more likely $4 a gallon.
Eddie Engles, 37, didn’t blink twice after he filled up his GMC Yukon at a gas station near downtown Chicago on Tuesday. At $3.71 a gallon, the fill-up cost the clothing distributor $83.89. “That’s a new record. Every time I pump up, it’s a new record,” he said.
There was a definite consumer reaction in September 2005 after Hurricane Katrina outages pushed prices above $3 gasoline for the first time. Demand dropped as much as 6.5 percent. “There was … something significant psychologically about the $3 barrier,” said Perner.
Since then, however, consumers seem to have adapted, with demand rising throughout a brief period of prices above $3 a gallon last summer.
“People complain about higher oil prices … but they still drive their cars, they still buy their SUVs, they don’t want to carpool,” said Fadel Gheit, an energy analyst at Oppenheimer &Co.
Consumers may suspect that oil refiners are colluding in the recent price spike, but analysts say the real culprit is an unprecedented number of refinery accidents and maintenance outages this spring – combined with drivers’ rising demand for fuel. Most prominent of the outages was a February fire that shut down Valero Energy Corp.’s 170,000 barrel-per-day McKee refinery in Sunray, Texas, for months.
“If you just count incidents, there are more this year than there have been in previous years,” said Mike Conner, a specialist on refinery operations at the EIA.
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