This is big headline from the Wall Street Journal.
Americans Start to Curb Their Thirst for Gasoline
March 3, 2008; Page A1
As crude-oil prices climb to historic highs, steep gasoline prices and the weak economy are beginning to curb Americans' gas-guzzling ways.
In the past six weeks, the nation's gasoline consumption has fallen by an average 1.1% from year-earlier levels, according to weekly government data.
That's the most sustained drop in demand in at least 16 years, except for the declines that followed Hurricane Katrina in 2005, which temporarily knocked out a big chunk of the U.S. gasoline supply system.
This time, however, there is evidence that Americans are changing their driving habits and lifestyles in ways that could lead to a long-term slowdown in their gasoline consumption.
As supplies have outstripped demand, gasoline inventories have been on the rise for the past four months, reaching their highest levels since February 1994. Yet, in a sign of the growing disconnect between demand and the market, prices at the pump are being driven higher by a powerful rally in crude oil.
Investors piling money into commodities as a refuge from inflation have helped push oil prices close to their inflation-adjusted record of $103.76 a barrel, set in 1980. On Thursday, oil closed at $102.59 a barrel on the New York Mercantile Exchange, a new high in nominal terms, but slipped back 75 cents on Friday to settle at $101.84 a barrel.
As refiners pay more for the oil they use, gasoline prices have gained sharply in recent weeks to an average of $3.13 a gallon in the week ended Feb. 25, up 40% from $2.24 a gallon in January 2007. That's stoking worries that prices will rise even more sharply as demand gets a boost from the approaching vacation season, when more Americans take to the road. Some experts predict gasoline could cost as much as $4 a gallon this summer.
If oil prices pull gasoline higher in the current economic climate, Americans are likely to pare back consumption even more, which should help at least damp the rise in prices as refiners build up a safety margin against fears of supply disruptions, experts say.
(Read the rest of the article at the Wall Street Journal)