Many Reduce Gasoline Usage

By James R. Healey

Americans have cut their gasoline use notably, an apparent response to the high prices that pre-dated Hurricanes Katrina and Rita and shortages that followed.

Small, fuel-efficient cars were 15.7% of new vehicle sales last month, according to Power Information Network, up from their typical level of about 14%. More important, owners of every type of vehicle — even SUVs and minivans — traded for small cars more often last month than they did a year ago, according to the PIN data. PIN is a unit of J.D. Power and Associates.

No data show it yet, but anecdotal accounts suggest Americans are driving less, too.

“People say, ‘I used to go out and eat, go out to the movies. I don’t do that now. I stay home and watch DVDs or HBO.’ Soccer moms tell me they’re no longer using their SUVs. They’re in VWs,” says Bill Douglass, CEO of Douglass Distributing, based near Dallas.

He operates 14 large convenience-store gas stations and supplies brand-name gasoline to 165 others in Texas.

The drop in gasoline use was noted in the U.S. Energy Information Administration’s weekly petroleum report Wednesday. It says gasoline consumption the past four weeks averaged 8.8 million barrels a day, down from 9.1 million a year ago. That’s a 3.3% drop.

Adding credibility to that, EIA also reported that gasoline inventories rose 4.4 million barrels last week, rather than declining, even though energy operations in the Gulf of Mexico were not running because of leftover damage from Katrina Aug. 29 and new disruptions from Rita, which hit Saturday. In fact, 100% of Gulf oil production was down Wednesday, the U.S. Minerals Management Service reported in a daily update.

Douglass says gasoline demand in his area has dropped 10% below last year’s, starting in August. It’s “a huge change” that he previously thought would take years.

Factoring out the few days of panic buying after Katrina, demand for gasoline has “been down 6% to 15%, depending on the store,” says Jay Ricker, president of Rickers, a chain of 33 convenience-store stations in Indiana. “When we crossed the $3 threshold, that was a defining moment, getting people to think more about their driving.”

If so, it’s a much-discussed moment. Automakers had been saying it would take an extended period of $3 gasoline, and some shortages, to get Americans to drive less or switch to fuel-efficient models.

An unsettled fuel market isn’t likely to encourage profligate fuel use in the near future. The wholesale price of gasoline for immediate delivery has shot past $3 in the Gulf, threatening big price boosts in the eastern half of the USA supplied by Gulf pipelines.

It’s also turned gas retailing upside down. Major brand stations have lower prices than some unaffiliated, discount stations. The unaffiliated stations pay the full wholesale price, but brand-name stations don’t. Their contracts with the oil companies keep their costs more stable. And the affiliated oil companies are absorbing some of the wholesale spike so their stations can raise prices slowly and prevent new accusations of gouging.

Douglass says he’s had no trouble getting gas from the major oil companies, but says he’s paying 10% more for it than he was a week ago. Independents are paying at least 20% more than a week ago, he says.

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.