Tipping Point for Gas Prices (Demand Destruction)

Confounding the Experts, A Poll Finds Prices Must Go Way Higher to Alter Driving

The average price that drivers said would compel them to significantly cut back on their driving was $4.38 a gallon. In the western United States, where gasoline prices are typically higher than in the rest of the country, the average respondent said the price would have to hit $5.12 a gallon.

In fact, the federal Energy Information Administration (EIA) yesterday reported that gasoline consumption last week was up 2.6 percent from the same week a year earlier, slightly higher than the trend so far this year.

“People used to think the tipping point was $3 a gallon. It wasn’t,” says Frank Verrastro, senior energy associate at the Center for Strategic and International Studies (CSIS) and a former executive at a large independent oil refining company. “People at the bottom end of the income scale are making other choices. The ones with discretionary income are upset but are buying the gasoline along with their lattes.”

The poll shows that the 44 percent jump in pump prices since January has left Americans generally unhappy and four in 10 of them angry.

Washington Post