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April 15, 2011

Americans Reduce Driving as Fuel Costs Continue to Rise 

With the price of gas above $3.50 a gallon in all but one state, there are signs that Americans are cutting back on driving, reversing a steady increase in demand for fuel as the economy improves.

For five consecutive weeks, Americans have bought less gas than they did a year earlier, The Associated Press reported based on data from MasterCard Spending Pulse, which tracks the volume of gas sold at 140,000 service stations nationwide.

For the week ending April 1, drivers bought about 2.4 million fewer gallons than they did one year earlier, a 3.6% reduction in consumption. That was the biggest decline since December.

Before the decline, demand was increasing for two months. Some analysts had expected the trend to continue because the economic recovery is picking up, adding 216,000 jobs in March.

"More people are going to work," said John Gamel, director of gasoline research for MasterCard. "That means more people are driving and they should be buying more gas."

Instead, about 70% of the nation's major gas-station chains say sales have fallen, according to a March survey by the Oil Price Information Service. More than half reported a drop of 3% or more -- the sharpest since Summer 2008, when gas soared to record highs past $4 a gallon.

A gallon of unleaded regular cost $3.81 on average as of Wednesday, according to AAA's Daily Fuel Gauge. Only Wyoming has an average lower than $3.50. The highest national average was set in July 2008 at $4.11.

Reduced gasoline sales results in lower tax collections for the federal Highway Trust Fund, which funds federal highway and transit programs. The federal gas tax has been fixed at 18.4 cents per gallon since 1993, so it does not climb with prices like the fuel sales tax in some states.

Americans' driving peaked in 2007, dropped in 2008 during the surge in gas prices and start of the Great Recession, then slowly climbed back up in 2009 and 2010, but has not yet returned to 2007 levels. (see March 4 AASHTO Journal story)


Questions regarding this article may be directed to editor@aashtojournal.org.

 
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