Gas prices continue to climb in Michigan. They reached a new record today hitting an average of $4.26.
From the Detroit Free Press:
Gas prices continue to climb in Michigan, with the average cost per gallon of regular gasoline jumping to $4.26 today from $4.22 on Tuesday.
Previously, the record price had been set in summer 2008. Tuesday's price broke that record.
A year ago, the average price per gallon in the state was $2.94.
In 2008, when gas prices shot up, demand for gasoline dropped as Americans adjusted their driving habits.
Some experts say that's not likely to happen this time around as Americans are not as shocked by the high gas prices.
Reuters had an analysis piece on high gas prices and demand:
Outrage over prices among American drivers, who consume an eighth of the world's oil, is turning into resignation with summer driving season around the corner. Motorists may bristle, and alarm over fuel costs is growing in Washington, but experts say the tipping point at which prices would slash demand has likely risen sharply since 2008.
One expert pegs the "tipping point" (the point at which drivers start to dramatically change their driving habits) at $5 a gallon.
The are several reasons for this according to the article:
- perception has changed - people are not as shocked by $4 per gallon gas
- employment is rising, putting more commuters on the road who aren't as anxious about paying higher prices at the pump
- people are reducing discretionary spending in other areas as they pay more for gas
- there is less media coverage on this price spike compared to 2008
A Mastercard analyst noted that demand is not falling that far despite the higher prices:
Even as pump prices rose over the last four weeks, U.S. retail gasoline sales were off only 1.2 percent from year-ago levels, according to MasterCard.Perhaps more telling, the clip of the decline appears to be leveling off. MasterCard analyst John Gamel said the firm's surveys have shown smaller declines occurring each week.
So what will it take for you to change your driving habits? Are you adjusting them already, or will it take $5 per gallon for you to hop on that bus?