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US drivers impervious to record-high oil


Veronique Dupont / AFP
08/19/05

The global oil market may be soaring to new highs but American drivers are not forsaking their gas-guzzling cars -- far from it.
While still cheap by European standards, gasoline (petrol) has never been so expensive in the United States.

The average US price of a gallon (3.78 litres) of fuel is 2.48 dollars, up seven percent from last month and a whopping 33 percent on last year, according to the American Automobile Association (AAA).
In parts of California and the New York conurbation, pump prices have even topped three dollars a gallon. This in a nation where two-dollar gasoline was headline news not so long ago.

Yet as Marshall Steeves, oil analyst at broker Refco, puts it: "People are willing to suck it up without changing their driving or their consumption habits."
Even as pump prices soared, US petrol stations saw turnover increase 2.4 percent in July from June, which itself saw an increase of 2.0 percent.

This is a time of year when many Americans take to the roads for their summer holidays. But drivers' resilience is also explained by the fact that in such a sprawling nation, autos are for many a necessity and not a luxury.

"You own a car, you have to drive to go to work: your driving is not based on the price of gasoline," Standard and Poor's economist David Wyss said.
He noted also that as a proportion of households' total expenditure, gasoline represents about five percent now compared to seven-eight percent in the 1980s, thanks in part to greater fuel efficiency.

But during the same interval, Americans have also embraced one of the least fuel-efficient modes of transport ever to take to the road: the chunky sport utility vehicle (SUV).
While advertised by their manufacturers as the ultimate in off-road capability, most SUVs rarely if ever stray from the route between suburban driveways and downtown parking lots.

"Car companies are much more aggressively pushing those SUVs, and people are buying the discounts saying, 'I want a big car'," Wyss said.
Notwithstanding the record rise in petrol prices, US auto sales have boomed this summer, going up 4.6 percent in June and then by an even bigger 6.7 percent last month.

General Motors kicked off a price war in June by offering employee discounts to all buyers, with Ford and Chrysler now both following suit. Such discounts have revived sales figures after months of poor growth.
Despite the SUV mania, the United States is not wholly deaf to environmental progress in automaking.

Sales of "hybrid" cars such as the Toyota Prius, which is powered by gasoline and electricity, have rocketed. A number of hybrid SUVs are in the works. Cleaner diesel engines are also growing in popularity.
President George W. Bush last week signed a sweeping energy bill that he says will eventually help wean the United States off foreign oil and therefore bring prices down.

The act offers some nods to cleaner technology, such as tax breaks for buyers of hybrid cars, but its critics argue the legislation is loaded with perks for traditional energy suppliers and the oil majors.

The AAA complained that as petrol prices go inexorably up, there is a deafening silence from the White House and from Congress.
The energy act "brings no relief to motorists or succour to consumers", an AAA government affairs lobbyist, John Townsend, said.

"It is only a matter of time before long-suffering motorists begin venting their spleens and expressing their outrage to their elected officials. Chances are this will become a big political issue," he said.