According to the U.S. Department of Energy, average prices for gas across the country hit $2.15 per gallon on March 28, and prices are climbing toward $2.20 this week. A less scientific, but no less revealing survey by GasPriceWatch.com finds a great deal of local and regional variation in the price of gasoline. According to the site (on Tuesday), the lowest spotted price for regular unleaded was in Chugwater, WY, at $1.88; the highest was in Baker, CA, at $3.44.
Nominally, gasoline is as expensive as it has ever been. In fact, however, adjusted for inflation, current prices have yet to surpass the real peak of 1981, though they may be headed that way. According to the U.S. Energy Information Administration's Annual Energy Review and Monthly Energy Review (Feb. 2005), the average price of a gallon of gas was about $1.40 in 1981, which would be about $2.90 in today's dollars.
Still, gas is a good deal more expensive than it was five years or even one year ago, and people are responding. According to the ICSC survey, 40% of consumers have reducing their driving. The shopping format that continues to be most affected by the reduced frequency of store visits is the downtown shopping areas (63%), while neighborhood shopping centers are least affected (50%). On the other hand, a majority of households, 56%, reported no impact from the increased fuel costs.
Despite some overall reduction in the frequency of shopping, 59% of households reported that they did not reduce spending over the last month on such items as clothing, shoes, jewelry, consumer electronics, beauty services or on non-essential items. But 63% of households said that the rapid increase in the price of gasoline has caused them to cutback on the frequency of going out to eat. Among the consumers who did cut back on spending, the total was evenly split between those that cut back considerably (20%) and those that cut back modestly (21%).
More than half of the consumers with household income of less than $25,000 (54%) reported they were driving less, and between two-thirds and three-quarters of those consumers had cut back on going out to eat and going to most shopping venues, according to the ICSC. At the other end of the economic continuum, 32% of households with incomes of $75,000 or above have reduced their driving due to the high gasoline prices, and only one-third to one-half of those high-end consumers have cut back on the frequency they go out to eat or visit most shopping venues. Of those high-end consumers, only 31% have reported any scaling back on their discretionary spending due to the jump in gasoline prices.
"Over the last year, there has been about a $14 increase in average weekly earnings, which is a key offset and reason why the economy and consumer spending has seen limited negative impact from higher consumer expenditures on gasoline," says Michael P. Niemira, ICSC's chief economist and director of research. "The most recent ICSC survey found 57% of households described themselves as more 'efficient shoppers'—making fewer visits per store, but buying more or combining shopping trips better—as a way of coping with the higher gasoline cost. This compared with 52%reporting that in May 2004."
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