Read this research by Experian Simmons. It is a fantastic example of pricing execution by the oil companies. It also begs a public policy question of whether the exceptional pricing ability of the oil companies is contributing toward “memory loss” by consumers of gasoline’s longer term price consequences? Is short term price signals helping or hurting?
Experian Simmons Research On Gas Prices:
Gas prices rose during most of 2008 until ultimately the average price of a gallon of regular gasoline in the United States hit $4.01 on June 16, 2008. According to the Energy Information Administration, the average price of gas nationwide stayed above $4.00 for a full six weeks, yet Experian Simmons DataStream shows that Americans were slow to change their driving habits in response.
As gas prices slowly rose, the percent of American adults who drove 100 miles or more each week remained relatively steady between 48% and 50%. Even when gas prices were above $4.00 approximately 49% of the population was driving at least 100 miles a week. It wasn’t until September of 2008 when driving habits really began to change. Between September 15, 2008 and January 19, 2009 the share of Americans who put 100 miles or more on their vehicle weekly dropped from 49.6% to 42.5%, a relative decline of over 14%.
The gasoline industry was quicker to respond to changes in consumer behavior than consumers were to react to rising fuel prices. The cost of an average gallon of gas began its decline on September 15th, the exact same week as the drop in driving distance was recorded. Between mid-September and December 29th the average price of a gallon of regular gas fell from $3.87 to $1.59—the lowest price recorded during the 104 week-period ending October 12, 2009.
Interestingly, as gasoline prices begin edging their way upward again, consumers are actually driving more, not less. Already by March 16th of this year, 48% of adults were back to driving 100 miles a week or more and by September 14th, a full half of Americans were driving that far. Gas prices are certain to continue their rise, but for the time being Americans seem to have all but forgotten about a time when they were spending almost twice as much on gas, at least as far as their driving distance goes.