Gas prices are rising to record levels as the summer travel season is upon us. With higher gas prices, “the EIA says the average U.S. household will spend an additional $190 to keep their cars’ gas tanks filled this summer.”[1] As evidenced in 2008, when gas prices rise, consumers start to change their buying behavior. Currently, American consumers are not seeing the $4 per gallon levels of 2008 but will make small changes in their lifestyles to compensate for the increased prices. Some consumers will cancel their summer vacations, but economists expect to see smaller, less drastic changes in discretionary spending. For instance, when a consumer pays more at the gas pump, they would be less likely to purchase items in convenience stores.
Trends have also shown that as prices rise, consumers begin to trade in their large SUV’s and trucks for a small, fuel-efficient vehicle. However, with the increase in fuel efficiency of vehicles, consumers are seeming to shrug off higher gas prices. Vehicles have been steadily increasing their fuel efficiency over the past decade at unprecedented rates. “So how will higher fuel prices impact consumer behavior? Ironically it could support demand for more crossovers, modern SUVs and trucks. The average age of a vehicle in the U.S. today is over 11.5 years.”[2] The irony of current, larger vehicles getting better fuel economy is an instance that has not been seen before. In the case of history repeating itself, one fact is true. Consumers will adapt to market conditions, but not like they did in 2008. If a consumer is looking to purchase a new vehicle, trucks and SUVs are now viable options unlike years past.
If consumers are not in a position to purchase a new vehicle, there are still options on how to improve gas mileage.
- Slow down! Gas mileage is impacted by speed. “According to GasBuddy, a website and app that allows consumers to find the best gas prices, driving too aggressively can cost drivers an extra $477 per year in fuel consumption, since speeding, braking and rapid acceleration can lower gas mileage by as much as 40 percent.”[3]
- Drive a little more. Even though it sounds contradictory, driving an extra mile out of your way might account for savings. “…drivers might want to avoid gas stations located on major intersections or right off the highway, which tend to have higher prices.”[4]
- It’s all about timing. Monday is the least expensive day of the week to purchase gas, followed by Sundays. Budget-conscious consumers should steer away from purchasing gas on Thursdays or Fridays.
Source: https://www.gasbuddy.com/NewsRoom/PressRelease/600
Current gasoline prices are not yet causing panic with consumers, but advances in fuel efficiency will lead to new consumer behaviors that the market has not yet seen. Discretionary spending will be the first impact and can be lessened if consumers adept to smarter buying behaviors.
[1] https://www.forbes.com/sites/jimgorzelany/2018/04/13/gas-prices-will-run-14-higher-this-summer-how-do-you-like-that-big-suv-now/#4c62c792f88d
[2] http://thehill.com/opinion/finance/386893-many-americans-are-shrugging-off-higher-gas-prices
[3] https://www.forbes.com/sites/reneemorad/2018/04/30/this-summer-is-expected-to-have-highest-gas-prices-weve-seen-in-years/2/#7e4eab29f01c
[4] https://www.forbes.com/sites/reneemorad/2018/04/30/this-summer-is-expected-to-have-highest-gas-prices-weve-seen-in-years/#c8f226c2081c
