Are Gas Prices Changing Your Behavior?

Suzanna De Baca -- Expert Business Source, 6/27/2008 8:10:00 AM

“These gas prices are killing me!” said a friend today.  She commutes an hour each way to and from work and is considering looking for a job in her small farm town in Iowa.  While the jobs pay less, high fuel costs and the time on the road are causing her to reconsider her options.

Here in Iowa, gas is now over $4 a gallon in many areas, but my friends on the coasts saw those numbers a while ago and are nervously eyeballing $5.  Today the price of oil hit $140 a barrel.  Who could ever have imagined that gas prices would hit these levels?  What’s interesting is that consumers are finally so fed up – or so financially stretched -- that behavior is actually changing.

If you are considering different options or altering your normal habits, you are not alone.  Americans are reacting to the high gas prices in various ways, changing their plans, rethinking employment choices, and looking for different vehicles.

Fox News reported today that 80% of shoppers are considering hybrid vehicles, and a recent NPD Group Consumer Panel indicated that over 6% have actually taken action and purchased a more fuel efficient vehicle. 

According to the NPD study, 12% of Americans have cancelled their vacations and the same percent have begun carpooling.  The study shows that 8% of respondents have started taking public transportation and 8% are vacationing closer to home.  Americans are beginning to telecommute, work from home or look for jobs close to home.  Other sources report that individuals are filling up their tanks halfway or just adding fuel as they can afford.

This is the first time since the late 1970s and early ’80s that a significant number of people are behaving differently because of gas prices, says David Portalatin, director of industry analysis for NPD’s automotive division, in a June 15, 2008 article in the New York Times entitled “When Gas Prices Lead to Roads Less Traveled,” by Phyllis Korkki.  Korkki writes that Portalatin noted that 2007 was the first year since 1980 that total miles driven in the United States actually declined when compared with the year before.
Who knows how high the price of gas will go?  Meanwhile, for better or worse, Americans are responding with their pocketbooks and with their actions. 

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.