High Prices Won't Curb America's Thirst for Gasoline

Seeking Alpha ^ | April 05, 2011 | by Devon Shire

[Red Badger]

As an investor with significant exposure to oil prices, I’m always worried about something like the financial panic of 2008 that might trigger a quick drop in the commodity. One thing I’m not overly worried about is the American public kicking its addiction to oil any time soon.

For years I’ve always gotten a big kick out of analysts on CNBC talking about how $2 then $3 and now $4 per gallon for gasoline would kill the demand for the product in the United States.

[snip]

And that is a bit strange, considering that Canadians pay quite a bit more than Americans at the fuel pump. Last week AAA’s fuel gauge report showed that the average price per gallon in the United States was $3.59. In Canada we are at $5 per gallon in many parts of the country.

You would think that $5 per gallon would change your fuel consumption habits. It hasn’t. And $4 per gallon or even $5 per gallon in the United States isn’t going to change much, either. Sure, if the price of gasoline jumps from $3.50 to $5 in the span of six months, there will be some short-term reaction. But over the long run, Americans aren’t going to be willing to significantly stray from the personal freedom a car allows.

And if you think Canadians have it bad, consider some of these prices per gallon where citizens still drive cars on a regular basis (from AAA):

Turkey: $9.63 per gallon Norway: $9.27 per gallon Greece: $8.50 per gallon Denmark: $8.42 per gallon Sweden: $8.18 per gallon United Kingdom: $8.17 per gallon

[CodeToad]

People need so much gas no matter the cost, but that money will come from other budgets, like eating out or movies or clothing.

[rbosque]

Los Angeles county is bad. Even with the car culture we have here, people are starting to take substitutes like public transportation. Some people are starting to fuel in nearby Orange county where the taxes are lower.

[SaxxonWoods]

I’ll try to find it. Read that quite some time ago. There was a very long list attached of all the products made using oil, you now the drill, shoes, carpet, packaging, etc.

[SaxxonWoods]

At this site I find a figure of 14.4% for non-fuel use.

http://askville.amazon.com/percentage-oil-consumption-consumer-products-fuel/AnswerViewer.do?requestId=2317764

That’s 6 year-old information. I’m guessing current non-fuel use would be higher, but 28% does sound much too high given this information. This changes the math calc, but not the concept.

Thanks for the catch. I have submitted a question at http://www.petrostrategies.org/Learning_Center/oil_and_gas_basics.htm. I’ll report on their response.