With High Gas Prices, Americans Are Already Driving Less, Buying Better MPG Cars

  • Share
  • Read Later
Adam Gault / Getty Images

Gas prices are soaring: The national average has increased 13¢ per gallon in the past week alone. The rise comes after weeks of steadily soaring gas prices, which is especially disturbing because February usually sees a decline in gas prices. Now, there are already signs that consumers are changing their behavior to cope with what seem like ever-escalating fuel prices, including less driving, higher sales of fuel-efficient cars, and fewer shopping excursions to Walmart and even the local convenience store.

Average gas prices already top $4 a gallon in three states (Alaska, California, Hawaii), and in Washington, D.C., and four other states (Oregon, Washington, New York, Connecticut), the average price for a gallon of regular is now at least $3.95. Over the weekend, Reuters reported that as of February 24, the national average per gallon stood at $3.69, a rise of 18¢ over the prior two weeks.

Lately, prices are rising at an even faster pace. AAA’s Fuel Gauge Report puts the current average at $3.738, up from $3.612 a week ago, a rise of nearly 13¢. That means gas prices are rising at a clip of something close to 2¢ per day.

(LIST: 5 Ways to Score Cheaper Gas)

How are consumers responding to the price hikes at the pump? By some account, it looks like drivers are trying to spend less simply by driving less. The Los Angeles Times notes that in California, where a gallon currently costs an average of $4.32, drivers have been scaling back for quite some time. Last November, when the statewide average was $3.85—which, amazingly, sounds cheap even though it represents a 64¢ hike from the year before—drivers consumed 2.6% less gasoline that November of 2010. Gasoline consumption in the state had declined nine months in a row for the period ending in November 2011, which is the most recent data available.

Experts say that the decline is a result of people driving less, and also more drivers opting for more fuel-efficient vehicles. And it’s safe to say that, in light of the fact that gas prices in California have risen nearly 50¢ since the numbers were gathered, consumers have been taking action in the only ways they really can: by taking inaction (i.e., driving less), and/or, if possible, by switching to a car with better mpg.

(MORE: The Plug-In Surge: Newest, Hottest Hybrids and Electric Cars)

But are drivers actually opting for smaller cars with better mileage? Data collected by the Detroit Free Press indicates that, indeed, plenty of drivers are doing just that.

February could very well wind up being Ford’s best month for compact-car sales in more than a decade. The number of Ford compacts sold in February 2012 will nearly double that of February 2011.

Smaller, more fuel-efficient cars are experiencing success across the board with most automakers. Though the numbers aren’t finalized, it looks like sales of small cars will represent 23% of all car sales in February. That’s up from around 20% in January, and from 19% in February of 2011.

(MORE: When Gas Prices Are High, High Car Prices Follow)

According to the laws of supply and demand, one of the unfortunate effects of more consumers wanting smaller, fuel-efficient cars is that prices for these cars will increase. Experts have warned drivers that, as gas prices rise, dealerships will be less likely to discount cars with good mpg. Why? Because they don’t have to. The feeling is that consumers will do the mental math, and it’ll still make more sense financially to buy a small, fuel-efficient car even if there are no good incentives and the dealer won’t budge on price.

Yahoo’s Dan Gross, meanwhile, anticipates that the biggest losers amid soaring gas prices could be retailers such as Walmart and Kwik-E-Mart type convenience stores. Why them? Because when consumers are spending $10 more per week on gas, they’ll have $10 less to spend at these stores. Drivers may cut back on the number of trips they’ll make out to Walmart, and also cut back on impulse purchases they know they shouldn’t make (i.e., bag of Doritos at the convenience store while filling up the car).

Airline prices are also expected to rise sharply, and as fares creep higher, travelers may alter their summer vacation plans. Driving, even when gas prices are high, is nearly always less expensive than flying.

(MORE: Summer Bummer: Higher Gas Prices Mean More Expensive Airfares)

The compulsion to scale back is only expected to grow stronger among consumers in the days ahead, with gas prices only expected to keep rising. The New York Times front page today discusses the likelihood of $5-per-gallon gas in the near future, and scenarios have been envisioned in which a gallon of regular costs $6 by early summer.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.