I had remarked to my Supermodel Wife that the QuickTrip on the way home showed the price of $3.19 a gallon -- for the cheap 86 octane stuff.
"I don't get it," she said. "What has happened that the price is going up? What has changed."
My answer? Nothing has changed.
People are still driving, which means there is a demand. Drivers continue to be willing to pay the higher prices. Take us, for example. Even with the per gallon price north of $3, we're still planning an out-of-town trips. We went to a wedding last weekend and we'll be traveling to a graduation ceremony soon.
Our behavior isn't changing. Or is it?
This USA Today reported that for the first time since the early 1980s, drivers are cutting back on their miles.
The growth in miles driven has leveled off dramatically in the past 18 months after 25 years of steady climbs despite the addition of more than 1 million drivers to the nation's streets and highways since 2005. Miles driven in February declined 1.9% from February 2006 before rebounding slightly for a 0.3% year-over-year gain in March, data from the Federal Highway Administration show. That's in sharp contrast to the average annual growth rate of 2.7% recorded from 1980 through 2005.The article points out that the price of gasoline is only part of the reason for lower miles driven. There are social and demographic causes as well, including a trend of upwardly mobile professionals moving into revitalized city centers and in increase in the use of public transportation.
So now it seems the rubber is meeting the road (or rather, not meeting it). The response by the petroleum industry will be interesting. Will there suddenly be a miraculous increase in gasoline production to increase supplies, stabilize prices and keep drivers driving? Do "they" think they have found the breaking point, and now want to stay as close as possible without going over?
Regardless, I don't think we'll see gas below $3.00 a gallon again.
But on the bright side, this information will help me make the case to my Supermodel Wife that I should start commuting to work on a new Vespa.
tagged: oil, gasoline, gas prices, peak oil, USAToday, drivers, Vespa