US: May 28, 2008


WASHINGTON - Battered by record high gasoline prices, Americans are finally parking their SUVs and embracing energy conservation, but any impact on world markets could be slow in coming.


As the US summer driving season kicked off with the Memorial Day holiday weekend, evidence mounted that Americans are cutting back on their driving and looking for alternative means of getting around.

Detrie Zacharias, 49, said high gas prices have forced him and his wife to change their driving habits.

"If we want to come out to dinner we use public transportation and then we walk," said Zacharias, a marketing manager in downtown Chicago. "It's a new thing for us."

Feeling pinched by fuel prices, more Americans like Zacharias are turning to mass transit. US mass transit ridership reached its highest level in half a century in 2007, with Americans taking more than 10 billion trips on public transport, according to the American Public Transportation Association.

Use of public transportation continued to grow in the first three months of 2008, with public rail-ridership climbing 16.8 percent in Baltimore, Maryland, 28 percent in Seattle, Washington, and 16.4 percent in Minneapolis, Minnesota.

"People are voting with their pocketbooks and saying gas prices are too high, and finding public transportation is a quick, affordable way to beat them," said Rose Sheridan, vice president of the American Public Transportation Association.

With gasoline prices hitting a record national average of $3.79 a gallon before the holiday weekend, Americans are also buying smaller and more fuel efficient vehicles.

"We saw a real change in the industry demand for pickup trucks and SUVs in the first two weeks of May," Ford Motor Co Chief Executive Alan Mulally said last week. "It seemed to us that we reached a tipping point where customers began shifting away from these vehicles at an accelerated rate."

Despite these conservation efforts, Americans should not expect prices at the pump to fall any time soon.

Though rising public transport use could put a dent in oil companies' refining profits, "the amount of volume of oil this actually results in when you compare it to the oil market in the world, it would actually be quite small," said Kevin Lindemer, managing director of Global Insight Energy Services.

Extensive gasoline use is built into the structure of American society, Lindemer said. Any changes to global oil prices will not happen until the crude oil supply is increased and consumers worldwide begin to use less oil.

"Neither of these happen over a short period of time," Lindemer said.


NOT A BRICK WALL

Cincinnati stay-at-home mother Tara Lee Stone, 33, could be a case in point that energy conservation could still be slow in coming.

"It's something for us to adjust to. I think about my trips a little bit more," Stone said as she was filling her fuel tank.

Stone, who said she drives a minivan rather than a more efficient car because she has two kids and a dog, noted that Americans were still better off than many.

"It's expensive, and it affects our lifestyle, but other places in the world have been paying that much for a long time."

US gasoline demand this year is expected to fall 0.6 percent, the first decline since 1991, according to the US government's Energy Information Agency.

The decline is significant after years of increases. But the impact will be modest on world oil markets at first as, like a supertanker, the world's largest energy consumer will be slow to radically change course.

"We are seeing somewhat of a response as we saw in 1978-79 when motorists first started going to the smaller cars," said Tancred Lidderdale, an analyst with the Energy Information Agency. "Generally we would expect it to be modest because each increase in gasoline prices is not like you run into a brick wall. It's sort of an increasingly steep slope that more and more people become affected and make small decisions."

(Additional reporting Andrew Stern in Chicago and Andrea Hopkins in Cincinnati; editing by Jim Marshall)


Story by Ayesha Rascoe and Russell Blinch


REUTERS NEWS SERVICE