What a difference a few months make. Last summer, we saw a tremendous rise in gas prices putting the average price per gallon in most areas over $4.00. This was a major shock to most people, and those who had long commutes saw their budgets thrown out the window as gas consumed most of their money. But look at what’s happened in just the past six months. Gas prices have fallen significantly, and in most cases, by more than 50%. The average price at the pump these days is under $2.00 a gallon.
This is both good news and bad news. It’s great if you need to rely on your car and find that you spend a good deal of money on fuel, but it also underscores the troubles in the economy and the overall reduced demand for oil. It’s also having a negative impact on all of the progress that was starting to take shape in the summer. With higher gas prices, we saw a surge in purchases for hybrid vehicles, an uptick in mass-transit use, and a lot of discussion about alternative energy. Now, as gas prices have dropped to “normal” levels, a lot of this has faded.
In fact, many auto dealers are reporting that SUV sales are back on the rise. Just six months ago, a dealer couldn’t keep enough small cars and hybrids on the lot and were practically giving trucks and SUVs away. How is it that we’re so shortsighted that in just a few months we’re reverting to our old ways? From a story out in Virginia back in December:
According to national data, truck sales accounted for 52 percent of all vehicles purchased in November, as gas prices declined. That marks a 3 percent increase from October, when gas prices averaged more than $3 a gallon.
When gas prices hit $4 a gallon in July, national sales dropped 73 percent for the Chevy Trailblazer, 65 percent for the Hummer H3 and 21 percent for the Ford F-Series. But as gas gets cheaper, consumers swing back toward trucks.
In some parts of the country, full-sized Ford F-150s were in such high demand that dealers had to trade them across state lines.
But not all of the draw back to large vehicles stems from the lower gas prices. A lot of dealers still have a lot of inventory of these SUVs and trucks that didn’t sell well last year, and they are offering some good discounts as they try to clear the way for new models. Even so, how much of a deal are you actually getting? It doesn’t take long for you $4,000 discount to be wiped out when you’re paying $4.00 a gallon versus $2.00 on a vehicle that gets 50% worse gas mileage.
Not that I care what people choose to drive, but I find it interesting how six months ago, the people with big vehicles were unable to sell them and would do anything to save a few bucks at the pump. But now, you have people going back to the same vehicles, when it’s all but certain that gas prices will rise again.
So that brings me to this week’s poll question. Has cheaper gas changed any of your habits? Have you bought a new car, or do you drive more than you were a few months ago? Personally, nothing for us has changed. We still have the came cars, and still have the same length of a commute, so the lower prices have only resulted in more cash in my wallet each month. And I’m certainly not about to go out and buy another truck of SUV just because I can get a good deal and gas is cheap. But that’s just me. What about you?
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
I am always trying to minimize my impact so I don't like to drive regardless of the price. It does leave a little more money in my pocket though. I just wish I could work from home to avoid having to deal with gas prices and horrible traffic.
Unfortunately, we all need to care what other people drive due to global warming issues, congested roadways and the need to wean ourselves from OPEC oil. Our personal driving habits do indeed impact the kind of world we live in. It may seem like an individual choice, but it has global repercussions.
Well, this is a little complicated for me. I moved closer to work so that I could cut the commute time there, but I got accepted into a program at the university that's 45 minutes away on a light traffic day...an hour on a bad traffic day. So, technically, I'm driving more than I was. All I can say is that I am infinitely grateful that we're not at $4/gallon anymore! I don't know what I would have done.
However, that said, I don't go joyriding around town or anything. I do what I need to do, combine my errands as much as possible, and I've even taken to carpooling on errands. I still try to be frugal about it, but I do have the added expense of driving to school.
Its happens due to economy disturbance.Every thing is uncertain.I don’t think driving habits really changed due to the prices. But the thing is you have to re planned your budget again because you are not sure what is happened next.
I bought my most recent car in January of 2008 and started tracking my gas mileage. Since I've begun tracking my mileage, my habits are always with a light foot and heavy coasting.
When prices spiked last summer I did cancel a trip and arranged to work from home one day a week. So you could say my habits changed somewhat. But since prices have gone down again I still drive like it's $5.00 a gallon and I just lost my job.
My driving hasn't really changed. I need to drive to and from work and the gym as well. The only thing I may change is I am more willing to drive around for errands or just to kill some time.
I'm one of the few that have changed driving habits. During the summer my wife and I made it a point to carpool back and forth to work as much as possible. But now we normally drive separately. With work being slow, I got tired of getting to work early and leaving late.
My driving habits haven't changed. I've always taken my son and husband to school (hubby takes the bus home), and we go to the store once a week and occasionally drive up to Idaho to see my family. We didn't change in the summer, and we haven't changed now. But we are happier for the reprieve on the wallet!
I don't think my driving habits really changed due to the prices. I get decent gas mileage and I have a short commute.
The only thing that needed modification was my budget. I'm working on a new plan and we'll see how that works. I'll probably have a discussion on it soon.
I found it humorous that people were selling their 1 year old SUVs for half it's value and paying a 25% mark up for a hybrid. Talk about being punked out of one bad deal and into another one.
I'm still in the same 2 year old SUV driving as little as possible, but I did advise those friends who wanted a new SUV to buy late last year.
Thankfully I work from the house, so my car doesn't see as much road time as it used to. However, I'm a lot more lenient about just running to the store now for a quick errand as opposed to waiting until it was absolutely necessary and I needed 5 other things from the store like I was several months back.