Subject: NYTimes.com Article: Laissez-Faire My Gas Guzzler, Already
Newsgroups: gmane.politics.activism.carfree-cities
Date: 2004-09-07 01:31:43 GMT (3 years, 43 weeks, 4 days, 16 hours and 38 minutes ago)
The article below from NYTimes.com has been sent to you by rickrise@... /--------- E-mail Sponsored by Fox Searchlight ------------\ I HEART HUCKABEES - OPENING IN SELECT CITIES OCTOBER 1 From David O. Russell, writer and director of THREE KINGS and FLIRTING WITH DISASTER comes an existential comedy starring Dustin Hoffman, Isabelle Hupert, Jude Law, Jason Schwartzman, Lily Tomlin, Mark Wahlberg and Naomi Watts. Watch the trailer now at: http://www.foxsearchlight.com/huckabees/index_nyt.html \----------------------------------------------------------/ Laissez-Faire My Gas Guzzler, Already September 7, 2004 By SIMON ROMERO "I don't like gas being this expensive," said Paul Kaesberg, an oncologist at the University of Wisconsin Hospital and Clinics in Madison who routinely pays $1.90 a gallon. "My driving is integral to my job, it's integral to my pleasure in life. I won't cut back on that. I might cut back on other things." Dr. Kaesberg, whose 2004 Acura sport utility vehicle gets 18 miles to the gallon, is typical of consumers who started the summer with the shock of $2 a gallon gas, but resolutely kept driving. Even though oil prices have increased 30 percent in the last year, the nation's gusto for gasoline has not been shaken. Over the Labor Day weekend, for example, about 28.7 million of the 34.1 million Americans traveling more than 50 miles from home were expected to be driving, a 2 percent increase from last year, according to AAA, formerly known as the Automobile Association of America. The economy, of course, has felt an impact from higher energy prices. Many companies, including airlines and trucking fleets, have started tacking on surcharges to compensate for higher fuel costs for their services, effectively passing on the costs to consumers. That, in turn, has contributed to spurts of inflation over the summer. Manufacturers and retailers say higher energy costs remain a threat, even as manufacturing activity remains somewhat robust. Some symbolic shifts in buying practices have also cropped up. Consumers are buying fewer Hummers while sales of hybrid vehicles are climbing; recreational boaters are opting to share their boats with friends instead of using two small vessels for an outing. But for the most part, Americans are not altering their fuel-consumption habits as they pay some of the highest prices ever for gasoline. Purchases of items other than fuel do appear to be weakening, however, a familiar development during periods of rising energy prices. On Thursday, retailers reported weaker-than-expected sales in August, with sales rising just 1 percent in the month, as companies including Wal-Mart warned that earnings would fall short of expectations. Still, such figures suggest that Americans are forgoing purchases of everyday items so that they can continue to drive as much as possible. The four-week average for gasoline demand for the week ended Aug. 27 was 9.421 million barrels, essentially unchanged from the period a year ago, according to the Energy Information Administration. Part of the explanation is because gasoline prices actually declined during the summer, to a national average of about $1.86 a gallon, from a record of $2.05 in May, while frenzied trading in financial markets pushed the price for a barrel of oil to nearly $50 from $40. (The price of crude oil is still far from its inflation-adjusted peak of about $80 reached in 1980.) That is because refineries in the United States produced ample amounts of gasoline in the last three months, meeting demand from consumers even as speculators placed bets on future swings in the price of oil that may have had little to do with actual petroleum supplies. "I don't think we're going back to $50 without a big supply disruption somewhere," said Juha Laiho, a Houston-based oil trader for Fortum, a Finnish oil company. "It's logical for gasoline to pull back a bit." Of course, gasoline at $1.86 a gallon remains about 10 cents a gallon more expensive than at this time last year, according to the Energy Information Administration, crimping many drivers. Still, it would have to become much more expensive to instill a big change in driving habits. Rebecca Lindland, a senior analyst for the automotive industry at Global Insight, estimates that gasoline prices would have to climb to a nationwide average of $3 a gallon for at least six months to alter consumer behavior. "Gasoline is still incredibly affordable," Ms. Lindland said. "Even with inflation it's not much more expensive than it was five years ago." Some consumers are feeling the pinch, however. Michael McMillan, a firefighter in Los Angeles who makes the 104-mile round-trip commute three days a week from his home in Mission Viejo, Calif., said the price of gasoline was behind his decision to trade a Mitsubishi Montero sport utility vehicle for a Volkswagen Jetta, which gets almost double the gas mileage. "I was really looking for something more economical for the drive," Mr. McMillan, 38, said. But judging from the parking lot at his station, he said: "You'd think there are no gas problems at all. You have a half dozen-plus jacked-up trucks back there on steroids." Seeking out energy-efficient vehicles still seems to be the exception rather than the rule. Sales of recreational vehicles, for instance, climbed 14 percent in the first half of the year from the period in 2003 and rental reservations for the vehicles made in the early summer were up 34 percent from last year, according to the Recreation Vehicle Dealers Association in Fairfax, Va. "People work too hard to let even $50 extra in gas prices stop them from taking their vacations," said Phil Ingrassia, a spokesman for the association. At convenience stores, which sell about 75 percent of the nation's gasoline, consumers are using credit cards for about 60 percent of fuel purchases, a 20 percent jump from last year, according to the National Association of Convenience Stores. Jay Ricker, who owns 31 convenience stores in northeastern Indiana, said he had seen little impact on purchases in his stores because of higher gasoline prices. "There's a lot of grumbling, of course, but unless the price gets to $3.50 a gallon behavior won't change," said Mr. Ricker, who added that he preferred lower gas prices so customers could continue buying higher-margin products at his stores. Gasoline in Indiana now costs about $1.75 a gallon. Some parts of the economy that depend heavily on oil are having a hard time. Airlines, for example, are struggling to find ways to cut fuel expenses that are expected to cost them $6 billion more this year than last year. Airlines are doing everything from taxiing out to the runway on one engine to cutting the amount of reserve fuel they keep on aircraft in case of delays. American Airlines, a unit of AMR, said its fuel expenses would be $1 billion more this year than it expected, and $300 million more in the third quarter alone, a reason why it is joining Northwest Airlines in charging passengers $5 a ticket for trips booked through its reservations agents and $10 for those bought at airports. American said that would raise $25 million in revenue, hardly a dent in its fuel bill. Fierce competition among airlines, however, has prevented the companies from making fuel surcharges stick through ticket price increases. Some low-fare carriers, including JetBlue Airlines, are better protected from rising fuel costs. David Neeleman, JetBlue's chief executive, told analysts this summer that the airline expected to cut its costs per available seat mile about 2 percent in the third quarter, even with higher fuel prices. That is because JetBlue hedged about 75 percent of its fuel purchases for this year. While certain areas of the economy seek to adapt to higher energy costs, such efforts are lost on most drivers. Julie Battistelli, 51, a nurse from Saugus, Mass., said she shunned public transportation, preferring instead to drive a BMW sport-utility vehicle acquired in April that costs about $10 a day in gasoline. "I have to have a car; I have a little girl I have to drive everywhere," Ms. Battistelli said. "In the suburbs you have to drive." Reporting for this article was contributed by Micheline Maynard in Detroit, Katie Zezima in Boston, Aaron Nathans in Madison, Wis., and Chris Dixon in Los Angeles. http://www.nytimes.com/2004/09/07/business/07fuel.html?ex=1095520703&ei=1&en=9c288bc83eda3a9e --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://homedelivery.nytimes.com/HDS/SubscriptionT1.do?mode=SubscriptionT1&ExternalMediaCode=W24AF HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@... or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@... 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