Tom Warne Report, 20 April 2012
American motorists are turning over a new leaf from their old gas-guzzler days, with drivers cutting their gas consumption to the lowest levels in 10 years. As gas prices top $4 a gallon in some places, drivers are also buying more and more fuel-efficient vehicles. The adjustment has been said to slow the recent steady increase in gasoline prices, which until last week had climbed for 10 weeks in a row, and could result in Americans having more money to spend in other places.
“Over the last four weeks, motor gasoline product supplied has averaged 8.6 million barrels per day, down by 4.0 percent from the same period last year,” the Energy Information Administration (EIA) said last week.
Consumers spend 4 percent of their total spending on gasoline purchases, according to Mark Zandi, chief economist of Moody’s Analytics. This is much higher than the 2.3 percent when crude oil prices plummeted in 1998, but much less than the 6 percent level in 1981 when oil prices sky rocketed. “I’ve been surprised, at least so far, that $4 a gallon hasn’t done more damage [to the economy],” Zandi said. “So far, it doesn’t seem to have done any.”
More efficient cars are also having more of an impact on gas consumption. A University of Michigan study this month reports that fuel efficiency of cars and sport utility vehicles purchased last month jumped to 29.6 miles per gallon in combined city and highway driving, up 4 miles per gallon from October 2007.