Washington (Platts)--14Jan2008

Consumer responses to the upward trend in gasoline prices that began in
2003 have been large enough to halve the steady growth in gasoline consumption
dating back to 1990, the US Congressional Budget Office said in a report
released Monday.

"If current high prices -- and consumers' responses to them -- persist,
the effect on overall gasoline consumption will grow stronger as older, less
fuel efficient vehicles are retired and as consumers consider other, less
easily implemented adjustments to their patterns of consumption," the CBO
said.

Consumers have responded in various ways to higher gasoline prices, and
the effect "has thus far been small, which is consistent with current
estimates of the short-run responsiveness of gasoline consumption to changes
in price," the CBO said.

The specific effects CBO found include highway motorists making fewer
trips and driving more slowly. "On weekdays in the study period (2003- 2006),
for every 50 cent increase in the price of gasoline, the number of freeway
trips declined by about 0.7% in areas where rail transit is a nearby
substitute for driving; transit ridership on the corresponding rail system has
increased by a commensurate amount," according to the report. "Median speeds
on congested freeways declined by about three-quarter of a mile/hour for every
50 cents the price of gasoline increased since 2003."

The CBO analysis was based on data from California, although the
findings should apply to metropolitan areas in other states to the extent that
those areas have similar driver, highway configuration, vehicle stock and
speed limit enforcement characteristics, the agency said.

After increasing steadily for 20 years, the market share of light trucks
(including sports utility vehicles and minivans), began to decline in 2004,
CBO said. "As a result, the average fuel economy of new vehicles has increased
by more than half a mile/gal since 2004."

The average prices for larger, less-fuel efficient models have also
declined over the past five years as average prices for the most-fuel
efficient automobiles have increased.


--Gerald Karey, gerry_karey@platts.com