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Gas Prices: Americans Pump Less To Offset Costs

By CHRIS KAHN and TOM KRISHER 03/23/12 04:44 PM ET AP

Gas Prices Pump Less

Americans have pumped less gas every week for the past year.

During those 52 weeks, gasoline consumption dropped by 4.2 billion gallons, or 3 percent, according to MasterCard SpendingPulse. The decline is longer than a 51-week slide during the recession.

The main reason: higher gas prices. The national average for a gallon of gas is $3.89, the highest ever for this time of year, and experts say it could be $4.25 by late April. As a result, Americans are taking fewer trips to restaurants and shopping malls. When they take a vacation, they're staying closer to home.

But the decline in gas consumption is also a sign that efforts to push carmakers to produce vehicles with better gas mileage are paying off. The average new car now gets nearly 24 miles to the gallon, compared with about 20 mpg just four years ago, according to the University of Michigan Transportation Research Institute.

"I'd expect to see lower gasoline consumption for several years to come," Rice University energy expert Ken Medlock says.

Americans have cut back on fill-ups for extended periods before. In 2008, gas spiked from $3.04 to $4.11 per gallon in seven months. It wasn't until January 2009, when the national average for gas had dropped to $1.86 that consumption increased. Drivers bought more gasoline for 23 weeks in a row.

"The spike in 2008 was a real shock to the system," Medlock says. "There's still a residual impact on people's driving behavior."

There were other stretches of reduced gas use, notably two into the 1970's and one in the early 1980's. But in those cases, Americans eventually went back to driving big cars and trucks that guzzled gas.

This time may be different. Medlock thinks economic growth will be too modest and gas prices will stay too high for Americans to start driving more anytime soon. Economists expect the U.S. economy to grow 2.5 percent in 2012. The government estimates that gas will average a record $3.79 per gallon for the year.

John Gamel, who oversees MasterCard SpendingPulse's weekly consumption report, points to rising sales of fuel-efficient vehicles.

"People have gotten used to elevated prices and they've made their long-term purchases," Gamel says. "They're going to be using less fuel."

Consumers now care more if a car gets good gas mileage than if it's reliable, stylish or comes with a great deal, according to a survey of more than 24,000 new-vehicle owners taken last summer and fall by J.D. Power and Associates. That wasn't the case in the nine previous years that J.D. Power conducted the survey.

Automakers have listened to consumers, and responded to stricter government fuel economy requirements. They've improved engines and transmissions so cars burn less fuel. They've also made cars more aerodynamic, boosting mileage by cutting wind drag. The government is gradually increasing gas mileage requirements so that by 2025, cars and trucks will have to average 54.5 mpg.

Between February 2011 and February 2012, the combined city-highway mileage of a new vehicle sold in the U.S rose to 23.7 mpg from 22.7. Better gas mileage has a huge impact on the overall economy. At $3.86 per gallon, U.S. drivers would save $35.8 billion per year with a 1 mpg improvement for the entire fleet of cars, trucks and buses, according to Michael Sivak, a research professor with the University of Michigan Transportation Research Institute.

Consumers would appreciate the help. The rise in gas prices has been so steep that they're still spending more on gas than a year ago despite using less.

Gasoline prices rose by 24 percent in the last 52 weeks, according to auto club AAA, Wright Express and Oil Price Information Service. MasterCard, which collects purchase receipts from more than 100,000 service stations around the country, said spending on gas rose by 20 percent during the period.

In 2011, Americans spent 8.4 percent of their household income on gasoline, or about $4,155, compared with 6.7 percent in 2010, according to experts at OPIS.

W.M. Lewis, a general contractor in Anchorage, Alaska, says he is spending as much as $150 a week on gas. He's consolidating his errands, but still limiting his driving because fuel keeps getting more expensive.

"It's changing everybody's plans," he says. "You have less money to spend."

Behind all this is the high price of oil. Brent crude, which is used to price most of the oil used to make gasoline at many U.S. coastal refineries, has jumped by 16 percent this year to more than $124 per barrel. Benchmark U.S. crude has risen 9 percent this year to more than $107 per barrel.

Increased gas use by the growing number of drivers in China and other developing nations more than makes up for the drop in the U.S. That contributes to an increase in global demand for oil, which in turn pushes the price higher. Fear of a disruption to oil supplies from the Middle East also is keeping oil prices at lofty levels.

____

Krisher reported from Detroit. Associated Press Writer Rachel D'Oro in Anchorage contributed to this report.

___

Follow Chris Kahn on Twitter at http://twitter.com/ChrisKahnAP

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Americans have pumped less gas every week for the past year. During those 52 weeks, gasoline consumption dropped by 4.2 billion gallons, or 3 percent, according to MasterCard SpendingPulse. The decli...
Americans have pumped less gas every week for the past year. During those 52 weeks, gasoline consumption dropped by 4.2 billion gallons, or 3 percent, according to MasterCard SpendingPulse. The decli...
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This user has chosen to opt out of the Badges program
08:01 AM on 03/26/2012
these fossil fuel fas******cists and their republican shills have had a noo***se around our ne***cks for the past 40 years...how to break them ? never vote for republicans or dinos.....
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08:00 AM on 03/26/2012
investigate the oil companies for price gouging through their fear mongering coupled with their gambling/speculating with their investment bankers....oh and also make it clear they can be controlled like public utilities....
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Stephen Thorpe
Every breath you take - I'll take one too!
04:55 PM on 03/25/2012
Americans have pumped less gas every week for the past year.

During those 52 weeks, gasoline consumption dropped by 4.2 billion gallons, or 3 percent, according to MasterCard SpendingPulse. The decline is longer than a 51-week slide during the recession.

**********

Demand is low, supply is high and prices aren't going down,......NO, they're being held (propped) up!

This, so it can be used as a political hammer on Barack Obama. That's what I think.
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PurpleLove08
09:50 PM on 03/24/2012
While great gas mileage is great, not having to own a car would be even better. Owning a car is not cheap at all, whether it's brand new or used. All cars need oil changes (with the exception of electric cars), new tires, etc. Think of all the money that could be poured into our economy if Americans didn't need to own a car and could spend that money elsewhere.
I'd much rather see our tax funds invested in a nationwide mass transit system and see more states and localities invest in beefing up their mass transit systems.
07:15 PM on 03/24/2012
40+ mpg is better than 18 mpg....... energy efficiency saves money......

Fuel economy will become a bigger part of our auto buying decision in the future.

Go electric and wave as you pass a gas station.
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north of 60
Quando Omni Flunkus Moritati
04:25 AM on 03/24/2012
Higher fuel prices are the only thing that will force North Americans to use less and use it more efficiently.

Lazy wasteful people have gotten used to just jumping in the car to satisfy their every whim. Biggest energy wasters on the planet, and some are quite proud of it, and even believe it's their God given entitlement. So sad to see a once mighty people fall so low. The fall of the Roman Empire was probably quite similar.
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eastray67
Fal De Rol
01:06 PM on 03/24/2012
Don't be so desparing, did you see the story recently about how a certain cohort of younger people were surveyed and it turns out that their spending priorities put paying for an internet service above having an automobile? Now that is good news as far as the values of young people today, isn't it?
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JackBlair69
True and Fabulous
03:58 PM on 03/24/2012
I hope you're being facetious.
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Bill Roth
I wrote it so it must be true....
02:03 AM on 03/24/2012
Or, maybe we should all just visit the oil barons and ask them how much money do you really need to make before you could never count it in your life time or your lucky off spring could for that matter.
mooncop1
Impeachment is a beginning, not an end.
07:25 PM on 03/23/2012
There is another way too by voting Obama out of office. Lets make that change and see what happens.
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north of 60
Quando Omni Flunkus Moritati
04:31 AM on 03/24/2012
The POTUS has no control over the price of fuel. It's a global market and most of the rest of the world pays more for fuel and taxes on fuel than we do. Oil companies are going to sell their fuel where they get the most profit and that's not in North America.

The price of fuel is also increasing because the US dollar is worth less as compared with other currencies, gold or oil.
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SkiingGator
Searching for the Castle Anthrax
12:10 PM on 03/24/2012
In 2008, with 2 oil men in the WH, gas prices hit the highest level to date
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GirlUsingBrain
The most dangerous animal in the forest is man.
05:49 PM on 03/23/2012
I drive a Honda Insight. No gas woes here.

I find myself laughing at all the giant SUVs on the freeways.
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north of 60
Quando Omni Flunkus Moritati
04:32 AM on 03/24/2012
I drive a high efficiency diesel, and half the fuel I use is made from recycled fryer oil.
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GirlUsingBrain
The most dangerous animal in the forest is man.
10:55 AM on 03/26/2012
Wow! Very cool!

Does your car smell like french fries?
03:49 PM on 03/23/2012
Don't drive a gas guzzler.

There are many fuel efficient vehicles to choose from.....

Park that Hummer and get a Pruis.
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north of 60
Quando Omni Flunkus Moritati
04:34 AM on 03/24/2012
Now, now... If people want to drive gas guzzlers that's their right of free will, however they've lost the right to complain about it and blame it on everyone else but themselves.
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Marcin A Mazurek
You live and learn. At any rate, you live. - D.A
02:59 PM on 03/23/2012
We're still far behind the curve on Fuel Efficiency - where in other countries that was the main point of difference for vehicles, only in the last few years have we come to terms with the idea that a car can be safe, strong AND fuel efficient.
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GarysDiscardedCaps
Without deviation progress is not possible.
02:57 PM on 03/23/2012
Just spent $40 to fill my 2011 Prius last night. A tank lasts us 2 weeks so $20 a week. Works for me.
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pcs5141
cut the crap
03:09 PM on 03/23/2012
My cars are paid for and I am on retirement after 2yrs unemployment (age discrimination),lost my house,(HAMP is a joke) and minus my IRA that got swallowed up by the theves on Wall ST. Just can't afford a Prius type car and it wont tow a trailer anyway.Probably MOST people are in the same situation so they have to suffer paying high gas prices which our gov(For the people ??) could do something about.
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GarysDiscardedCaps
Without deviation progress is not possible.
05:18 PM on 03/23/2012
Sorry for your predicament. If I follow the Conservatives talking points/logic your financial situation is YOUR problem and if you can't fix it then tough luck. I, for one, don't carry those views but I'm just throwing it out there for reference. I have a few more years till retirement and lost half my Stocks/IRAs in 2008. I recovered over the years and in Aug 2011 a sizable chunk was again lost due to the Debt Ceiling Circus which I attribute squarely to the Right. They caused it, they own it.They spent during the Bush years and then refused to pay for it. I read some of your points on how to "fix" the gas crisis by simply pulling out of OPEC or the world market. Can't be done and if it could why didn't Bush/Cheney do it when gas was over $4 a gallon in 2006? Republicans had both the Pres and Congress. Why didn't they try to break from the World Market then? We make more money selling our oil that's why. We use 20% of the Oil used in the world but only produce 2%. You figure it out.
02:56 PM on 03/23/2012
Electric, hybrid, flex-fuels and CNG are all alternatives to gas and are cheaper per mile.
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pcs5141
cut the crap
03:10 PM on 03/23/2012
Initial investment is out of reach for most people.
11:45 PM on 03/23/2012
Seems like the real goal of automakers should not be improving the current gas guzzler models, but moving on to the alternatives and finding ways to make them more affordable.
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KarmaPatrol
Riverboat Gambler, satellite whisperer. Independe
02:53 PM on 03/23/2012
Take less marginal long-distance "road trips" and run more errands on one trip. Take vacations in cities with good mass transit (San Francisco and New York instead of the Los Angeles or Orlando FL areas). Pretty simple actually.
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pcs5141
cut the crap
03:11 PM on 03/23/2012
Who can afford "vacations" anymore ????????????????
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KarmaPatrol
Riverboat Gambler, satellite whisperer. Independe
04:13 PM on 03/23/2012
Some can afford it, and some are on "extended" vacation from the labor force.
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relians
the interconnectedness of all things
02:31 PM on 03/23/2012
the less gasoline we use, the higher the prices will go.
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pcs5141
cut the crap
03:12 PM on 03/23/2012
The gov could fix that if they wanted to.
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relians
the interconnectedness of all things
03:43 PM on 03/23/2012
how?