Drivers Hit the Brakes as Gas Prices Rise

gas pricesWith the price of gas above $3.50 a gallon in all but one state, there are signs that Americans are cutting back on driving, reversing a steady increase in demand for fuel as the economy improves.

Gas sales have fallen for five straight weeks, the first time that has happened since November, according to MasterCard SpendingPulse, which tracks spending at 140,000 service stations nationwide.

Before the decline, demand was increasing for two months. Some analysts had expected the trend to continue because the economic recovery is picking up, adding 216,000 jobs in March.

"More people are going to work," said John Gamel, director of gasoline research for MasterCard. "That means more people are driving and they should be buying more gas."

Instead, about 70 percent of the nation's major gas-station chains say sales have fallen, according to a March survey by the Oil Price Information Service. More than half reported a drop of 3 percent or more - the sharpest since the summer of 2008, when gas soared past $4 a gallon.

This year, gas prices have shot up as unrest in North Africa and the Middle East rattled energy markets and increased global demand for crude oil squeezed supplies. A gallon of unleaded regular costs $3.77 on average, and only Wyoming has an average lower than $3.50. Gas is already 41 cents more expensive then at this point in 2008, when it peaked at $4.11 in July.

Most analysts are sticking to forecasts of a high of $4 a gallon, though some have predicted $5 gas.

Across the country, some drivers are already hunting for cheaper gas, sometimes with the help of a mobile phone app. Others are checking out bus and train schedules, reconsidering mass transportation, or trading in their SUV for a more fuel-efficient model.

Kim Cramer, who works for Radio Flyer in Chicago, has started walking and carpooling more. She's also learned to be choosy, buying gas in suburbs, where she's learned she can save as much as 20 cents a gallon.

"I try to fill up anywhere besides the city," she said.

About two and a half days' worth of Whitney Shaw's pay each month goes just to fill up her 2001 Hyundai Accent. The administrative assistant is thinking about taking the bus for her daily commute, 50 miles each way between Branford, Conn., and Hartford.

"It's three hours of pay from work just to fill up my tank even once, so I'm definitely feeling it," Shaw said while filling up for $3.61 a gallon at a Valero station on the Berlin Turnpike.

Americans also appear to be turning to smaller, more fuel-efficient cars to save on gas. Sales of the Hyundai Sonata and Elantra soared 55 percent in March. Meanwhile, sales of Chevy's Suburban SUV dropped nearly 24 percent.

MasterCard's report shows drivers bought 2.7 billion gallons of gas last week, down 3.6 percent from the same period in 2010, when it was 80 cents cheaper.

The decline is somewhat puzzling because Americans typically curb their driving only as a last resort, after sacrificing other forms of discretionary spending, like shopping for new clothes, or going to movies, concerts and restaurants.

But demand for gas is falling while other types of spending are on the rise. Retail sales rose 2 percent in March compared with a year earlier, surprising economists who were expecting no increase or even a decline.

Gamel said it's too early to tell whether this is the kind of long-term decline in demand that the economy endured during the recession. Prices already are in the range when Americans started to leave their cars in the driveway several years ago. Drivers began to cut back on gas in October 2007, when the national average approached $3 per gallon.

Even if demand for gas keeps falling in the U.S., it probably won't be enough to force the price down. That's because worldwide demand for crude oil keeps rising.

Global demand for oil is about 87 million barrels per day, matching its peak from 2007. It is expected to grow to more than 88 million barrels a day by year's end, with most of the increase coming from China. At the same time, supply is shrinking because of uprisings in Libya and elsewhere in the Middle East.

In the United States, people are watching their local gas stations a little more carefully. Some are even getting rid of their old gas-guzzler.

Andrea Meyer of Manteno, Ill., has done both. She buys gas in the middle of the week because prices seem to jump over the weekend. And she recently sold her 2005 Chevy Envoy SUV and bought a 2011 Chevy Cruze, which gets 30 miles per gallon. She still spent about $200 on gas for the new car from mid-February to mid-March.

"I won't go hungry tomorrow," she says. "It's just taking away from me getting ahead faster. It throws off everything. It immediately makes you reprioritize."

Associated Press Writers Barbara Rodriguez in Chicago, Ben Dobbin in Rochester, NY, and Stephanie Reitz in Hartford, Conn. contributed to this story.

Increase your money and finance knowledge from home

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Stock market news today: Oil going down. Goldman Sachs shook oil markets for a second day after it called for a fall of almost $20 in the price of Brent crude oil in coming months. So if it's at $106 a barrel now, minus $20 in the next few months - that's good news.

April 12 2011 at 1:27 PM Report abuse +1 rate up rate down Reply

Reported on Meet the Press: US oil production is at an all time high and contrary to what has been posted, hundreds of permits have been issued for drilling the last two years. Top producers of oil in the world: #1 Russia #2 Saudi Arabia #3 United States. Doesn't matter when it goes to the highest bidder - it's the capitalist way.

April 12 2011 at 12:40 PM Report abuse +1 rate up rate down Reply
1 reply to inasctg56's comment

Yet the gop fights for tax dollars to go to our oil industry while making record profits. So we pay in tax dollars and at the pump.

April 12 2011 at 12:41 PM Report abuse +1 rate up rate down Reply

High Oil prices effect every aspect of our lives. Everyone knows this, but our Gov. won't do anything because they get a lot of $$$ from big oil. We are all screwed until we say enough is enough; until then....just open your wallet.

April 12 2011 at 11:35 AM Report abuse rate up rate down Reply
1 reply to Jeff's comment

No - the gop won't allow anything to be done. The dems have presented regulating speculative buying and the gop screams too much govt. Just like cuts for food inspection.

April 12 2011 at 12:38 PM Report abuse +1 rate up rate down Reply

Today, the United States uses 20.7 million barrels of oil per day. Its net imports number about 12.4 million barrels, or 60%.
Wind water and the sun have been powering the world since the begining of time,,oil has been around a little over a hundred years and just a passing FAD
Right now the United states is the only industrial nation that is NOT building a hydro electrical dam for power,, China, Canada, and brazil are the top hydro users. China now has 16 under construction and the United states has ZERO, the ONLY way we can fight back against BIG OIL is to use another product. Every dollar we spend on hydro, solar or wind power is a dollar taken away from big oil, and the only real competition they face,________________________

The United States currently has over 2000 hydroelectric power plants which supply ... Dedicated hydroelectric projects are often built to provide the substantial ..... Paraguay produces 100% of its electricity from hydroelectric dams, ...

April 12 2011 at 11:15 AM Report abuse +1 rate up rate down Reply
1 reply to danielisticall's comment

Under Bush we are way behind the rest of the world. Look up how many countries have high speed rail, yet the gop fights it. High speed rail is a win win. More goods could be transported by rail because it doesn't take as long and costs less, fewer trucks on the road means less demand for oil, fewer road repairs and pollution. Also more people would travel by rail when it doesn't take as long which leads to more economic growth for hotels, restaurants, and tourists attractions. But as usual the rest of the world is wrong and the gop is right. Why? Big oil.

April 12 2011 at 12:35 PM Report abuse +1 rate up rate down Reply

And every time the dems mention regulating speculative buying the gop screams too much govt. Wouldn't want to interfere with their biggest contributors record profits - big oil and wallstreet.

April 12 2011 at 10:05 AM Report abuse +2 rate up rate down Reply

Well the big oil companies will have record profits again this year !!!!!!!

Time to tell everyone in DC------------ You all are fired time for a change the ones that voted look what happened, time for a change. Shoot I dont even have change in my pocket any more. Wow

April 12 2011 at 6:32 AM Report abuse rate up rate down Reply

What have the dems done? Passed legislation in 2007 that took money away from big oil and steered it toward our auto industry for R&D with mandates for better mileage and now low and behold we have suv's that get 32 mpg as well as waiting lists for chevy volts (almost all US auto workers are back to work), electric batteries being built here (500 at just one plant that pays $14 to $18/hour), and charging stations being made in this country. They eliminated the tax incentives for corporations to go overseas, they eliminated the 5.25% tax rate for those overseas profits, they passed legislation for 100% write offs for improvements made in this country that has demand way up for machinery and equipment, they gave the IRS the resources to go after offshore accounts with over 14,000 coming forward, they passed banking legislation that addresses the problems of the 2002 banking legislation that allowed predatory lending and less govt oversite on wallstreet, they've created 1.3 million jobs in 13 months, manufacturing and export gains for 20 months, and more. What's the gop done? Cut jobs and wages while handing even more over to corporate tax cuts.

And more good news: Retail sales up again, and unemployment claims continue to decline. 1.3 million jobs in 13 months, 20 months of manufacturing and export gains, demand for machinery and equipment up. All those manufacturing paychecks are coming back into communities and creating demand for goods and services just like the economists said.

April 12 2011 at 12:33 AM Report abuse rate up rate down Reply
2 replies to inasctg56's comment

inasctg56....You can pick up your check at the White House. Use the back door of course.

April 12 2011 at 7:21 AM Report abuse -2 rate up rate down Reply

Yet you can't come back with one thing the gop has done - just one liners.

April 12 2011 at 10:06 AM Report abuse +1 rate up rate down Reply

The CFTC does have the power in the Financial Reform Act to limit the positions of financial firms and hedge funds held in the over the counter spot market for oil futures.They just will not use that power.It may be time to demand that this action be taken.

April 11 2011 at 8:45 PM Report abuse +2 rate up rate down Reply

Meet the Press reported that US oil production is at an all time high. And who are the top producers in the world? #1 Russia, #2 Saudia Arabia, #3 the good ole USA. Speculative buying needs to be controled and every time the dems mention doing this, the gop screams too much govt.

April 11 2011 at 5:47 PM Report abuse rate up rate down Reply

It would seem well past time to bring back the "Big Oil" trust busters. What was the Exxon-Mobil profit this past year or two????

April 11 2011 at 4:11 PM Report abuse +1 rate up rate down Reply