The NPD Group Reports Gas Prices Not Likely to Discourage Summer Driving
10 July 2000
The NPD Group Reports Escalating Gasoline Prices Not Likely to Discourage Summer Driving
PORT WASHINGTON, N.Y. - Despite all the controversy surrounding rising gasoline prices and the effect they may have on summer driving, findings from leading marketing information provider The NPD Group indicate gasoline prices have not yet impacted driving behavior as much as one would expect.In a special analysis of the NPD Motor Fuels Index, the firm reports that gasoline consumption remained steady through May and is not expected to slow down during the summer's peak driving months of June through August.
During the first five months of 1999, the primary driver in the typical American household made five gasoline purchases a month, consuming 13.3 gallons of gasoline each time. Between January and May 2000, NPD verifies, Americans filled their tanks an average of 5.1 times a month, consuming 13 gallons of gasoline each visit. This stability in consumption comes even as the national average price of gasoline during January through May 2000 rose over 32% versus the same period in 1999.
"A consumer who purchases $10 worth of gasoline is buying fewer gallons per purchase compared to a year ago; but if that same consumer's driving habits don't change, those $10 transactions simply convert to more frequent fuel stops," states Larry Moore, president of automotive, petroleum, and convenience store tracking at NPD.
Last year, American drivers paid an average of $1.11 for a gallon of gasoline (all grades) from January to May. This year, the average price rose to $1.47 a gallon for the same period. The average price for all grades of gasoline reached $1.52 in May.
"Surprisingly, our data show drivers don't consume less gasoline when faced with higher prices in the short term," said Moore. "And, despite recent oil production hikes, we're likely to see only a gradual decline in gasoline prices. There is a great deal of concern that high prices will result in a decrease in the amount of summer driving and vacations planned for this season. But while people say they will cancel trips and drive less, when it comes down to it, gasoline consumption is not likely to change at all in the near future. Prices would have to remain at these levels for a sustained period before we would see the kind of behavioral changes seen in the 1970s." According to Moore, such behavioral shifts could include switching to more fuel-efficient cars, car-pooling, and trip reductions, all of which are behaviors demonstrated during the '70s "energy crisis."
According to NPD, in the short term, consumers are more likely to cut costs by using less expensive grades of gasoline. In January of last year, when fuel prices were much lower, 15.4% of drivers reported using premium unleaded. By May of this year that number had decreased to 11.3%, indicating that as prices rise, premium use declines. Although the number of gallons per purchase and the number of purchases per month continues to closely mirror last year's consumption values, usual unleaded premium consumers admit to using lower grades of fuel with less expensive price tags.
About the Study
The NPD Motor Fuels Index is based on surveys of 220,000 consumers. The sample is demographically and geographically balanced to US. Census Bureau statistics. Data are collected on a monthly basis.
Trended information is available from as far back as 1983. Information reported includes: brand share, brand loyalty, reasons for purchase, method of payment, where paid, grade usage, gallons per purchase, number of purchases -- last 30 days, other services used, and demographics.
The Motor Fuels Index is part of a portfolio of services for the petroleum, automotive, and convenience store industries that includes the Automotive Oils Index, the Convenience Store Monitor, and AUTOPOST (automotive point-of-sale database). These services are provided by NPD's Automotive and Petroleum division located in Houston, Texas.
About The NPD Group, Inc.
The NPD Group is an international marketing information company headquartered in Port Washington, NY. Founded in 1953, the firm specializes in providing insight into consumer purchasing and behavior via both Internet-based and traditional research methodologies, including online and offline consumer panels and point-of-sale tracking.
NPD offers proprietary databases and research expertise in more than 20 industries, including apparel, automotive products, consumer electronics, cosmetics and fragrances, financial services, food, foodservice, footwear, housewares, information technology, interactive entertainment, new media, pharmaceuticals, toys, and more. The firm also offers a full range of analytical tools for ad hoc research. NPD is the developer of the revolutionary Web audience measurement technology now marketed by its successful spin-off Media Metrix, Inc. NPD has offices and affiliations in 36 countries, covering North America, South America, Europe, Asia and Australia.