Demand for Gasoline in U.S. Declines

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As the price of gasoline keeps rising in the U.S., the demand for gas is dropping off.

The government and industry groups say motorists have cut back on buying gas for six straight weeks. The response by the public could signal trouble for the economy since consumers usually cut spending on other activities before they begin to limit driving.

Since January, the national average for a gallon of regular unleaded has jumped 91 cents to $3.98 cents. The main reason is a 20 percent gain in the price of oil this year. Gas rose more than 30 cents in April alone, as refinery problems led to an unusually big drop in supplies.

Gas is now above $4 per gallon in 13 states and Washington D.C.

Some analysts say it will hit $5 a gallon by this summer -- while others believe the price is near its peak.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, told the Associated Press consumers will be forced to cut back if gas prices go much higher. The run of consecutive price increases - now at 43 days - should end soon, he says, noting that gasoline and oil futures have fallen each day this week.

"You can never tell whether you're in the middle of a price correction, and today we're wondering if we are already there," he said.

Current gas prices are only a few cents away from reaching the all-time high of $4.11 per gallon, set in July 2008.

"The American consumer is reaching a tipping point," retail expert Howard Davidowitz said in an interview with the AP last month. "They're buying cheaper cuts of meat. Instead of a big bottle of ketchup, they're buying a smaller one because it costs less money."

Meanwhile, the most expensive way to buy gas is through the major rental car companies.

Customers who don't pre-pay or don't return the vehicle with a full tank can pay between $7.00 and $9.00 a gallon.

"Actually, that is a hugh surprise. It's usually about $2.00 more per gallon than the average. But $9.00? $8.00 or $9.00? Pretty high," exclaimed Jeff Daniels, a car rental customer.

So far, rental car companies say the high prices are not affecting their business. Their highest gas prices are usually found at the companies' airport locations.


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