NEW YORK – Consumers may not like paying nearly $3.00 a gallon at the pump, but today’s gasoline prices aren’t causing most motorists to change their “gas-guzzling ways,” writes The Wall Street Journal.

“A 25 percent jump in prices at the pump since December has set off a firestorm in Washington. Politicians are threatening auto makers with tougher federal fuel-economy standards and oil companies with higher taxes on record profits, while warning against price gouging. Auto and oil executives are predicting that a long-term shift toward greater fuel efficiency is under way. But none of these influences is likely to have much effect on gasoline prices or oil consumption in the near term,” the newspaper reports.
 
According to the Journal, U.S. gasoline consumption traditionally increases about 1.5 percent each year, except following last year’s hurricanes (from September 2005 to February 2006) when gasoline consumption declined compared with the previous year, according to data from the U.S. Energy Information Administration (EIA). However, in March, as gasoline prices increased, demand “appeared to return to more robust levels, growing by 1 percent.”

“There's definitely a noticeable decrease in the growth of demand,” Tancred Lidderdale, senior economist at EIA told the newspaper, adding, “The problem is demand is still growing.”

Today’s current cost of gasoline is steep, but it’s not “debilitating” for most consumers, notes the Journal. According to EIA data, the price per gallon of regular gasoline averaged $2.74 in April. “Adjusted for inflation, what was still 14 percent below the peak in March 1981, when, in today’s dollars, gasoline averaged $3.18,” notes the Journal.

Americans are also “better positioned” to handle higher fuel prices than they were in 1981. “Gasoline now accounts for only 3 percent of total personal consumption spending, down from 5 percent in 1981,” according to the U.S. Bureau of Economic Analysis, notes the newspaper.

Moreover, most consumers aren’t likely to change their habits because of high gasoline prices. A Plano, Texas, resident told the newspaper he will continue to drive his expensive sports utility vehicle because he feels it’s a safe car, even with two to three fill-ups per week. “I won't limit driving because of gas prices, because it's a necessity," he commented, adding that his only concession to high fuel prices is switching from premium to mid-grade gasoline.

“It takes a very big price increase to have a big impact today,” Philip Verleger, a Colorado-based oil economist told the Journal. He estimates that real or inflation-adjusted gasoline prices would have to increase about five times the rate of real income to keep the nation’s gasoline demand flat. “Given that real income is rising at about 3 percent a year, real gasoline prices would have to surge 15 percent to prevent consumption from growing,” Verleger estimates.

According to federal statistics, during the first quarter of 2006 the real price of gasoline averaged 17 percent more than a year earlier and U.S. gasoline consumption was close to flat at 0.3 percent. However, Verleger and federal energy officials caution that “it’s too early” to discern any “long-term trends” from the data, notes the Journal.

Researchers suggest that if gasoline prices remained high for several years, then perhaps they would “meaningfully curb” overall consumption because consumers would factor in the price per gallon into decisions relating to their personal gasoline consumption. “They might choose more efficient models when it comes time to replace cars, as happened in the early 1980s. They might decide to switch jobs or move to shorten their commutes,” writes the newspaper.

On Monday, May 1, EIA reported that the U.S. retail price of regular gasoline increased 0.005 cent to $2.919 a gallon, which is up from $2.914 on April 24 and $2.783 on April 17. While prices decreased in some markets, prices surged 13.4 cents in California to reach an average of $3.202 per gallon.