[cornholio]

We complain about increasing gasoline prices, and assume that increasing prices will curb use... But we also hope/assume that it will curtail someone else's use before our own, allowing us to continue driving as before. What price will gasoline have to rise to to get you cut your oil use by half and walk, bike or bus instead ?

What I'm wondering is ?What is the point at which demand destruction will kick in for you personally? (IF your current income were unaffected, today's dollars). Think about your monthly gas expense...

Personally, If it goes over 5$ (USD/gallon) im cutting my use in half by getting the smallest most efficient mini-car I can (to get to work) and biking a lot more...

[frankthetank]

5 bucks...assuming i still am able to hold down a job.

Only problem i see is that if people don't cut down gas consumption they will have to either

A. Work more (another job, prostitute, etc)
B. Buy less (walmart junk, plastic dolls)
C. Steal

(A) isn't likely if there is a shortage of jobs.
(B) will cause more unemployment and stock market meltdown.
(C) will fill up the jails, needing more gov employees with fat paychecks and sweet pensions.

Currently i probably spend around 50 a month in gas (for me) and wife about the same. We could stop driving one car and consolidate.

[fossilnut2]

If gas was 15/gallon I'd be filthy rich.

The question is simpler: "Does the price of gas at the pumps impact how much you buy?" The precise dollars and percent of decrease usage are hard for anyone to judge. So sure, increase in price dampens demand but by how much? Probably halfthe nation would have once said they'd stop buying gas when if it ever hit $2/gallon....instead they use more.

[Tanada]

$this->bbcode_second_pass_quote('cornholio', 'W')e complain about increasing gasoline prices, and assume that increasing prices will curb use... But we also hope/assume that it will curtail someone else's use before our own, allowing us to continue driving as before. What price will gasoline have to rise to to get you cut your oil use by half and walk, bike or bus instead ?

What I'm wondering is ?What is the point at which demand destruction will kick in for you personally? (IF your current income were unaffected, today's dollars). Think about your monthly gas expense...

Personally, If it goes over 5$ (USD/gallon) im cutting my use in half by getting the smallest most efficient mini-car I can (to get to work) and biking a lot more...

[donshan]

In the 1970s we had a full size 1969 Chrysler Station Wagon pulling a 4000 lb RV trailer all over North America including a trip to Mexico City and back. That Chrysler had the biggest V8 ever made with a 4 barrel carb that used gas like a flush toilet when you stomped on it. I could accelerate all 8000 lb and pass someone going up a mountain pass. Gas mileage?- I didn't keep track of it!. We replaced that Chrysler with a full size V8 pickup truck with dual 19 gal tanks and one smaller car. Dual tanks were popular, because sometimes there WAS no gas. I remember griping when it first took $30 to fill BOTH tanks in the truck.

Now we have just one car that gets 30+ mpg. The 1973 gas line memories are still with us today. We started downsizing in the 1980s.

Those of you that did not get to "enjoy" ( ) the 1970s gas lines, and wondering if you would even be able to find gas on a trip, will learn what it is like soon. The evacuation of Houston for Rita is a precursor of everyday life. Availability of gas at any price will become as much an issue as price.

[bobbyald]

Well at $5 a gallon we would jump for joy in Europe.

I would have thought $10 - $15 would cut usage by half here on average.

Personally I would vote $25 but it's not an option.

I don't use the car much anyway (I cycle to work).


I wonder where all this demand destruction will take place.

[dinopello]

Interesting Poll, depends heavily on how you use your car obviously. If you commute everyday in a car then I imagine you do not tolerate much increase. I use it mainly for trips out to the mountains or beach or to visit my parents (all about 300 mile round-trips) so at 30 MPG I figure its reasonable to spend about $100 to do any of those at the intervals I do them. So I said $10

[bobcousins]

I read an article somewhere on the interweb that said demand destruction in the 70's occurred when gas expenditure reached around 5% of household income, which I think in todays prices is about $6 dollars a gallon. I can't find this reference, it was on one of those finance websites. If anyone finds the article please post the link!

[cornholio]

The fact that oil is sold on a global market makes demand destruction more complicated... Bidding will not just be between users in the West. When there is actual supply shortage the price will be determined by "bidding" between nations... Will an american consumer be able to outbid an asian consumer (or factory?). Will asia be able to price increasing oil prices into their exports without greatly reducing demand? If US demand for asian exports goes down and the Asian economy suffers will it fall faster/further than the US market (determining who gets oil in the following years)... It all seems too complicated to make a prediction... Per Capita GDP would suggest that the US consumerwill be able to outbid China or India if US import demand is curtailed by recession/depression, but it may not be that simple. US GDP per gallon of gasoline is higher than elsewhere...

[WisJim]

I think that the rate of price increase of gasoline will play an important part in how much less people in the USA drive. It has been fairly gradual over the last few years, and when it jumps 10 or 20 cents a gallon, people slow down a bit for a few days, then they get used to it and keep driving.

[Rabbit]

I am using 1/3 of the gas now than I was two years ago. I sold my Motorhome and bought a motorcycle to ride to work. I use my older SUV only when I need to carry more than I can carry on my motorcycle. I find I can go for weeks with our driving the SUV. I moved close to work and I now live 6 miles from work. My wife does medical transcription from home. We live across the street from my sons school. Even with the high price of gas we only spend about $100 a month on gas. I am close enough to be able to ride to a bicycle or even walk to work if I had to.

I've known that eventually oil will run out. I still remember the chevron commercials when I was a kid about how the dinosaurs were turned into oil and it is a finite resource. The one thing I have learned from this web site is that we can expect some kind of over correction. If every person on the planet knew what was happening and every worked together to power down I think we could do it in an organized way. The fact is that many people are and will continue to be in denial.

I am now working to power down my energy usage in all aspects of my life. I am working to pay off my only loan, our house. I am also working on ways to become more self sufficient for the future including solar panels on our roof.

[Chaparral]

$15.00 USD. I started cutting my commute by being more selective about what jobs i'd take a year or so ago. Now I'm selling all real estate investments that take more than a half hour of travel time to get to. Soon I'll have no need to take the freeways anywhere except a possible bug out location up on a mountain.

[MrBill]

I hardly drive in any case. I have always tried to live close to work so that I can walk or bike and when I have lived further I have always used public transport. Only 4 years out of the past 19 have I had to commute to work. Therefore, I am probably as immune to high prices as anyone.

However,if you consider that people are willing to spend up to 30% of their net income for a house they do not need in terms of square footage and ammenities it is realistic to expect that eventually they would be willing to spend the same portion on transportation if push comes to shove and they were faced with either walking or not travelling or commuting to work.

If the average US salary is $44.000, and take home pay is $33.000, then 30% is $9900 per year. If gasoline costed $15 per gallon, and your car gets 30 mpg, then you could afford to drive about 20.000 miles per year for that $9900 per year at 30 mpg and $15 per gallon. I cannot say whether that would be a 50% reduction in driving for most people, but I think the demand elasticity would not totally breakdown until gasoline becomes seriously expensive.

Certainly, $5-6 per gallon in Europe has not seriously priced people out of their autos. Europe still has crowded streets and autobahns despite paying more than double what Americans pay and their GDP per person is on average (EU25) less than the US.

However, before gasoline became that expensive you would likely see quite a change in real-estate values. In Europe you have much higher values in the city center than outlying areas. I think that reflects the difference in transport costs fairly accurately, but not entirely. I think people tend to underprice their commute in terms of total costs and by undervaluing their time. That is one reason why I always lived close to my work. I found it was cheaper than commuting and I value my time highly.

[whereagles]

I'm paying around $6 a gallon (1,4€ a litre), and I could easily deal with 15$ a gallon. The cut-off would be something like $20-25. Then I'd have to buy a motorcycle or bicycle or something like that.

[aahala]

I would say my wife and I would cut gasoline consumption 50% if the
price rose to about $5.(This week's price here is 2.10-2.18.

We had reduced our earlier useage by perhaps 20% or so with the rising
prices this year and have not returned to our earlier ways. I would not
walk 4 miles to save a buck, but I probably would be able to reduce the
trips to Walmart some more if prices were much higher.

[jdmartin]

Interesting replies so far.

Since most people primarily use their car for getting to work (in the US, anyway - not that sure about other countries), a big part of it would depend on how much money you make, and how easily you could replace the difference by cutting out gas usage.

Example: You make 100k gross per year, 65k net, and use 20 gallons of gas per week to get to work (25mpg, 500 miles round-trip).

Gas price Amount/week Amount/year (50wks)
$2 $40 $2,000
$3 $60 $3,000
$4 $80 $4,000
$5 $100 $5,000
$8 $160 $8,000
$10 $200 $10,000
$15 $300 $15,000

So you can simply plug in your take home, subtract your annual cost, and there's your new salary. Now, can you make that close enough that you can walk (or reduce transport costs to nothing)? If you work at Wallyworld and make $20k gross, 16k annual, and gas gets to costing you $5 a gallon, you're down to 11k annual take home. Now that $13k job at Goodwill that you can walk to looks pretty good. On the other hand, if you're making the 67k take home, even 15k in annual expense is going to be harder to replace unless you live in a large metro area.

Of course, if you've got the ability, you can get a vehicle that's more efficient and slice some of that cost off. Of course, I've left out the cost of owning and maintaining the car, which has an effect.

I think ultimately what we'll see is more downsizing to more efficient vehicles to take up the slack, and then gradually demand destruction for the far-off, low wage jobs.

PS: I put $8 down, although anything above 3 bucks would really start to hurt.

[turmoil]

Here's a nice little calculator I made that everyone can use to calculate their usage in their currency. Simple, yet amazingly flexible.

Calculate

edit: let me know if you are using it, or if you want me to add something.

[Tyler_JC]

My part time job disappears at the $6-$8 a gallon range.

So after $8 a gallon...I'd sell my car.

But I wouldn't really be "conserving" anything, I'd just figure out a way to get other people to pay my transportation expenses. Or I could buy a decent bicycle.

But I know that the restaurant I work at would stop being profitable at $6-$8 a gallon. The customer base would start cutting back at that point and going out for ice cream is what most would consider a luxury.

[GoIllini]

$this->bbcode_second_pass_quote('frankthetank', '
')(B) will cause more unemployment and stock market meltdown.