Gasoline prices this week reached a new record average of $4.02 per gallon, according to the AAA Fuel Gauge Report.
Gas prices have broken a record $4-per-gallon average for the first time in the United States.
(Credit: AAA Fuel Gauge Report.)Two-thirds of Americans have already changed how much they drive due to high prices at the pump, according to a poll commissioned by Access America Travel Insurance and Assistance.
Seventy-four percent of those polled said they would drive less, once gas hits $4 per gallon. Eighty-five percent said $5 costs per gallon would motivate driving changes.
The median price to spark a shift in driving habits was $3.20 per gallon, which was near the average several months ago. Gas prices have risen by 29 percent in a year, according to the American Automobile Association.
However, 9 percent of respondents said no amount of sticker shock at the pump would change the way the drive.
To save money, 26 percent of people surveyed said they'd reduce recreational driving, and 21 percent said they would try to run multiple errands at once. Only 7 percent named carpooling as an option, followed by 6 percent claiming that they would walk or bicycle more.
Among the first people to adjust the way they get around are those in homes earning less than $50,000, as well as Southerners, parents of children younger than 18, and "those saying the country is headed on the wrong track," according to Access America. Public transportation was favored most by people earning less than $25,000.
The telephone survey of 1,000 adults was conducted by Ipsos Public Affairs between May 30 and June 2.
Soaring gas costs could bring a boost to the makers of hybrid cars and of electric vehicles, which remain in limited production.
Dealers report a short supply for hybrids, which people are waiting months to buy.
In January, 44 percent of respondents to a survey told trade group Hybrid Owners of America that they would consider buying a hybrid, once gas topped $4 per gallon.
Diesel, at $4.79 per gallon, costs even more than gasoline, according to the AAA.
Prices have also skyrocketed in the past year for biodiesel and other biofuels, which are increasingly demonized for driving up food prices. Waste vegetable oil, which restaurant owners used to beg green gearheads to haul away for free, is fetching high prices.
Web sites including GasBuddy.com help locate less-expensive gas- and diesel-filling stations.
But the main argument for supporting corn ethanol production has always been about energy independence and fuel switching. Enabling a new source of supply into our gasoline supply chain should in theory, put some some downward pressure on gasoline prices at the pump, and keep those energy dollars at home rather than send them overseas.
So the real question is, does it?
A very interesting paper was published at Iowa State last month says yes, US ethanol production (almost all from corn) has reduced gasoline prices at the pump $0.29-$0.40 per gallon, depending on the region. Further, that the reduction came largely at the expense of profits the refining industry would otherwise have made (indicating perhaps that our ethanol production helped US consumers at the pump, but did not impact world oil prices).
In their paper entitled The Impact of Ethanol Production on US and Regional Gasoline Prices and on the Profitability of the US Oil Refinery Industry, authors Xiaodong Xu and Dermot Hayes analyzed the impact on price at the pump and refining profits of adding ethanol to the US gasoline fleets by separating the impact of ethanol from the major variables like gasoline imports, refining capacity, refining utilization rates, hurricanes, market concentration in refining, stocks, and seasonality, that generally affect gasoline price.
I find their $0.29 to $0.40 per gallon results a surprisingly large number, indicating that ethanol production, while providing on average well less than 5% of our gasoline supplies over their study period, could have affected prices at the pump downward to the tune of greater than 2 to 3 times that percentage level. That result is a huge win for ethanol proponents, as it suggests that adding ethanol to the US fleet has significantly benefited consumers (as one would expect), and also suggests that the ethanol subsidy program (at about $0.40 per gallon for 5% of the US gasoline production works out to around a 1 to 2 cent effective tax on gasoline at current levels) may well have paid for itself up to 20x over or more. The studies authors are careful not extrapolate too much from the results, but they are certainly interesting enough to warrant significant further research, and argue a strong case for further corn ethanol support.
Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Green Tech blog.
Consumers won't pay more for cars that would meet new, stricter emissions standards.
That was the message sent last week by Susan Docherty, Western Region general manager of General Motors, as a handful of automotive journalists (including yours truly) sat scattered at a very large table in a private room in the back of one of Santa Monica's poshest hotel restaurants during a GM-sponsored holiday dinner.
The proclamation erupted out of a somewhat heated debate with one of the print journalists at the table, sparked in part by news that a U.S. District Judge had dismissed a lawsuit filed by automakers over a California law that would require car manufacturers to reduce new car emissions over the next several years.
The statement was especially curious coming from someone who had worked for one of the most expensive automotive brands in the U.S. Prior to her previous position, Docherty worked as head of marketing and sales for Hummer. According to her biography, her launch of the H3 increased Hummer's sales by more than 70 percent. If there are obviously plenty of people who will pay more than $30,000 for SUVs that get 13 miles per gallon in the city, why wouldn't there be a market for a $30,000 midsize car that gets 40 miles per gallon (or better)?
Some of us aren't so quick to underestimate the increasing savvy of the American consumer. While there are still people who will buy the biggest vehicles they can afford without regard to long-term consequences, the average car buyer is getting smarter. Even putting questions of social responsibility aside, basic economics tell us that the financial implication of buying a car goes far beyond the sticker price; it's about the overall cost of ownership. And we think you get that.
What do you think?
- prev
- 1
- next
