Half of U.S. adults consider gasoline prices to be “too high” when it reaches $3.44 per gallon, indicating a potential break-point on prices, according to a new consumer price index developed by AAA.
“It was not long ago that motorists were shocked to pay more than $3 per gallon for gasoline, but now that is standard at stations nationwide,” said Robert L. Darbelnet, AAA president and CEO. “Today’s average consumer feels a breaking point on gas prices closer to $3.50 per gallon, and expensive prices have forced many motorists to change their driving habits.”
AAA’s gasoline-price index tracks consumer attitudes by determining at what price the cost of gasoline becomes too high. The results from the open-ended survey demonstrate how attitudes can be expected to change as prices rise above significant milestones:
46% believe gasoline is too high when the price reaches $3 per gallon.
61% believe gasoline is too high when the price reaches $3.50 per gallon.
90% believe gasoline is too high when the price reaches $4 per gallon.
“It is possible there is a new normal in terms of consumer attitudes now that gas prices have remained above $3 per gallon for more than two years,” Darbelnet said. “Most people have resigned themselves to paying higher gas prices and are cutting back on driving, shopping, and dining out to save money.” Consumers report changing their driving habits or lifestyle in a number of ways to offset recent gasoline prices, including:
Driving less: 86%.
Reducing shopping or dining out: 71%.
Driving a more fuel-efficient car: 54%.
Delaying major purchases: 53%.
Working closer to home: 39%.
Using public transportation more regularly: 15%.
Younger consumers (ages 18 to 34) are more likely to offset recent gasoline prices by working closer to home or using public transportation than adults ages 35 and up (48% vs. 35% and 25% vs. 10%, respectively). These results could suggest a generational shift in terms of attitudes towards driving, but it is too early to say whether these attitudes will continue into the future.
Although the national average price of gasoline last week was $3.52 per gallon, prices currently vary by more than $1 per gallon nationwide. The national average has remained above $3 per gallon for 28 consecutive months and above $3.44 per gallon for 82 days.
AAA developed the price index by asking respondents, “At what price do you start to consider the cost of gasoline to be too high? Please tell me the price per gallon to the nearest 10 cents.” AAA combined the answers from 974 respondents to determine the potential consumer breaking point for high gasoline prices.
Recent storms and resulting power outages have provided the catalyst for higher retail prices in the Midwest. However, analysts had warned that the region was susceptible to price increases because regional refineries had yet to undergo maintenance and make the transition to summer-blend gasoline production. Gas stations in much of the country must make this retail switch by June 1, but refineries shift to making summer blend in March and April to meet the May 1 production deadline. During this switch, regional production is reduced and supplied markets are more susceptible to unexpected disruptions, as was the case during the recent storms in the Midwest.
The primary factors driving retail gasoline prices lower in recent weeks have been low demand, continued disappointing economic news, and lower crude oil prices. (Source: CSP Daily News)