Drivers Stay In, Gas Prices Drop -- When?

[marmar]

from AP, via Yahoo!:



Drivers Stay In, Gas Prices Drop -- When?
Wednesday March 19, 4:22 pm ET

By John Wilen, AP Business Writer


NEW YORK (AP) -- Florida dental products salesman Jean Laborde doesn't take as many fishing trips as he used to. Student Kaitlin Kelly has started carpooling to work and school in New Jersey with friends.

Across the country, people already struggling with rising food prices, weak wage growth and falling home values are finding ways to manage the soaring cost of gasoline. They're combining errands, sharing rides, eliminating pleasure trips and using public transit more.

With these changes, U.S. consumers caused a remarkable 1 percent drop in gas consumption the last eight-week-period over a year ago. Gas use should be rising 1.5 percent annually just to keep up with the population. The last time a drop that length was recorded was in early 1997.

As gas prices rose to $2 a gallon and $3 a gallon, Americans were expected to trade their sport utility vehicles or drive less, but the strong economy kept pumps busy. When gas prices hit a record $3.23 a gallon last May, Americans shrugged it off as another temporary spike, but that was before the economy spiraled downward.

Things are different now that the economy has soured. Sharply higher prices for food and other basic goods and weak home prices that limit the ability to cash out equity for spending money are wearing consumers down.

"In the past, their budgets weren't being attacked from all sides," said Joel Naroff, an economist and president of Naroff Economic Advisors in Holland, Pa. "People are adjusting not only to the rising price of gasoline, but now the soaring price of food."

With pump prices averaging $3.28 a gallon and expected to peak between $3.50 and $4 this spring, the question becomes: when will drivers begin using significantly less gas? And once we get there, will prices fall?

Experts point to California for one answer. Last November, demand plummeted by 3.7 percent as gas prices soared past $3.40 a gallon -- 30 cents over the national average. ......(more)

The complete piece is at: http://biz.yahoo.com/ap/080319/gas_prices_tipping_point.html?.v=1&.pf=family-home

[The2ndWheel]

1. It's not an "American" problem

The globe is increasingly connected in too many ways to count. We've simplified the complexity to the point where nothing that is done doesn't touch something else. Yet still there are billions of people barely hooked, or not hooked, into the global economic system. The tankers aren't just coming to American ports these days.