Drivers Learn to Cope With Pain at the Pump
Gas is too essential to leave to purely market forces, said a letter from 22 governors sent last week to Congress. Both President Bush and Democratic leaders have responded by trying to raise mileage standards on new automobiles, a move critics suggest merely encourages people to drive more miles. The House also passed a bill that would punish anyone who artificially hikes fuel prices, which prompted the Bush administration to conjure up ghosts of gas lines past. Energy Secretary Samuel Bodman called the price-gouging measure a "gasoline price-control bill," arguing that it could bring back 1970s-style gas lines.
Those run-ups also occurred almost overnight, says Brown of the Dallas Fed. This time around, gas has several times neared or exceeded $3 a gallon, with prices climbing more steadily. "We've had much more time to adjust," he explains. Industries can find cheaper energy, and conservation can take hold. "If prices stay high, I'll definitely look at getting a different car," says Wolfe, the St. Louis SUV owner.
Still, there are signs that the volatility is hitting sectors of the economy, including discount retailers like Wal-Mart, and that sustained prices of $3 or more will begin to curb driving. Some government data suggest that for the first time in decades, motorists drove fewer miles in the first quarter than a year ago.
But lifestyle changes make it difficult to significantly cut driving. Two-income families put two cars on the road, often to homes in distant suburbs or ferrying kids. "I grew up in the '70s and rode my bike to soccer," says Christopher Knittel at the University of California–Davis. "Now we drive kids there."
Americans don't cut back so quickly on driving after fuel prices rise, at least not as they did in the 1970s, according to a study that Knittel coauthored. It would take a price increase about five times as high as the ones back then to get the same response from U.S. drivers, he says. That would suggest prices would have to leap several dollars. In other words, says Knittel, "prices have to skyrocket to have much effect."
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