HOUSTON: Prices at the gasoline pump are rising again, much as they do every spring as oil traders bid up the price of crude ahead of possible summertime shortages. Possibilities for more conflict in Iran and elsewhere in the Middle East are adding to the surge.
But there is something new this time, energy experts say, in how drivers are reacting - or, more accurately, not reacting, even as the price of gasoline has climbed during the past two months to a national average of more than $2.60 a gallon. Europeans have long forked out more than double what Americans pay. But per gallon costs topping $3 a gallon, or 79 cents per liter, in many parts of the United States, particularly along the Pacific coast, is rare for the U.S. consumer.
In the late 1970s, OPEC oil shocks and gas lines persuaded most Americans to sacrifice some of their pleasure trips and drives to the mall, ease up on the accelerator, and switch to the bus or train.
But as Americans enter the sixth year of rising oil and gasoline prices, their shift in driving habits this time has gone through a much less dramatic change. What's more, in recent weeks, gas consumption is going up, not down, and drivers are changing their daily driving habits only slightly.
"I don't think about gas prices at all," said Michael Machat, 48, a lawyer in West Los Angeles, where gasoline prices are among the highest in the country.
As he filled up his BMW with super unleaded at $3.39 a gallon this week, he added, "I guess maybe if it was $10 a gallon, I'd think about it."
A recent study co-authored by Christopher Knittel, an economics professor at the University of California at Davis, showed that every time gasoline prices went up 20 percent between November 1975 and November 1980, consumers changed their driving behavior by cutting their gas consumption by 6 percent per capita nationwide.
However, between March 2001 and March 2006, drivers reduced consumption just 1 percent when prices rose 20 percent.
Prices swung up and down seasonally during both periods, but Knittel said the two periods were comparable because regular gasoline prices increased in both periods by about 66 percent to $2.50 from $1.50 in real terms, set at 2000 dollars.
While more and more consumers around the country are buying smaller, more efficient cars and fewer SUVs, that trend is unfolding a lot more slowly these days than 30 years ago.
It was a very different era back then, when Congress was willing to enact tougher gasoline standards and when then-President Jimmy Carter called on the country "to live thriftily" and "find ways to adjust and to make our society more efficient."
According to Aaron Brady, an expert on gasoline refining and consumption at the Cambridge Energy Research Associates, a consulting firm, "One would think that with prices up over the last few years, people would drive less but that's not the case.
"Demand is up over the last year."
The Department of Energy reported Wednesday that gasoline demand for transportation during the past four weeks has averaged 9.2 million barrels a day, or 1.6 percent higher than during the same time span last year, when prices were a bit lower.
The rising use by consumers and businesses is putting further pressure on prices.
On top of that, U.S. commercial crude oil inventories fell by 0.9 million barrels in the week ending March 23, compared to the previous week. Spring is also the season when refineries retool their plants, producing slightly less gasoline.
Economists say the reasons for the increasing demand for gasoline and the muted reaction among drivers are based on many factors, which have enormous policy implications as the Bush administration and the U.S. Congress attempt to find ways to stem climate change and oil imports, which now supply about 60 percent of U.S. needs.
Experts note that people are driving longer distances to work because of suburban sprawl, the improvements in mass transit have fallen behind over the years, and the practice of driving to malls and ferrying kids around has become part of the U.S. lifestyle.
Some observers suggest that with more dual-income families, high gas prices mean less to many families than they once did, and the proliferation of credit cards has eased the immediate pain of consumers at the pump.
"Our preferences have changed over the years and we are much more willing to continue our driving habits in the face of price increases," said Knittel, who was studying driver response to gas prices increases.
"Unlike the 1970s when people did drive less, data shows people now are not taking the extra step to conserve."
Interviews with a sampling of drivers around the country show they are less than alarmed by the new run-up in prices, even if they aren't happy about it. And they still suspect Big Oil is fleecing them. Not surprisingly, higher-income drivers are particularly unruffled, but middle-income drivers also seem fairly tranquil.
Veronica Burgos, a 39-year-old bookkeeper, says she is not about to give up her aging, gas-guzzling Navy blue Ford Explorer to commute to work and shuttle her children around, even though gasoline prices in the Los Angeles area where she lives are now "ridiculous."
"With this SUV, you really feel it, but I have two kids so I need it," she said. "In reality my husband would probably rather that I don't drive the SUV so much but I still do and I drive quite a bit. With work and two kids and all their activities, especially on the weekend, we're more comfortable in the SUV.
"So what are you going to do?"
Across the country, prices of gasoline have been shooting up relentlessly for the past two months, with the Energy Department reporting earlier this week that the average retail price for regular
unleaded hitting $2.60 a gallon, the highest rate since last September and 11 cents higher than a year ago. According to AAA, the average national price hit $2.62 on Thursday, up from $2.37 just a month ago.
With crude oil prices rising in recent days after the Iranian detention of British military personnel last week, some experts say that retail gasoline prices may go up another 10 or 15 cents a gallon in the next couple of weeks before settling down. At just over $64 a barrel on Wednesday, crude oil has gone up about $6 in just the last week, and retail gasoline prices tend to follow not long after.
"The market rally in gasoline is like the Oscars," said Tom Kloza, chief oil analyst at Oil Price Information Service, an independent trade publication. "It gets moved up every year."
The immediate seasonal cause for the rise in gasoline prices is the annual slowdown in March in refineries, as they undergo retooling to switch from winter to summer oil blends. But this year, that has been accentuated by a flurry of recent refinery accidents, escalating political tensions involving Iran, and greater speculation by traders.
"The prices for unleaded gasoline are way overblown for this time of year," said Michael Rose, director of the energy trading desk at Angus Jackson in Fort Lauderdale, Florida. "The traders are just going along with a theory that we are going to have a gasoline shortage in the summer."
Most experts expect prices to ease sometime in April, as refineries resume full operation, before rising again during the traditional summer driving season.
But many are wondering why the demand for gasoline is going up this March, a month not usually known for heavy driving.
"Is it because the economy is stronger or because people are going back to their old driving habits?" Charles Drevna, executive vice president of the National Petrochemical and Refiners Association, asked.
There had been signs that the high price of oil was beginning to have an impact on consumption. The International Energy Agency reported that oil consumption in its 30 member countries, including the United States, had declined 0.6 percent last year, the first drop in more than two decades.
Sales in sport utility vehicles peaked in 2002, and have fallen since then. Meanwhile sales of small cars rose 5.3 percent last year. But Knittel said that he found little change in the average fuel efficiencies of vehicles driven by motorists in the past five years.
"Our preliminary analysis is showing vehicle choice is less sensitive to gas prices today than compared with the 1970s," he said. "We might be buying fewer SUVs, but a lot of the shifting is to cars that are not appreciably more fuel efficient, such as minivans."
Lisa Munoz contributed reporting from Los Angeles, Nate Schweber from Westchester County, New York, and Micheline Maynard from Detroit.
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