Gasoline prices are up to a national average of $3.89 per gallon . In order to save money, many people have been trying to reduce the amount they drive. Mastercard SpendingPulse helps paint a crude picture on the state of gasoline consumption in the United States. In the past year, gasoline consumption is down by about 3% . However, this has done little to ease the pain on people’s pocketbook as spending on gasoline rose by about 20% in this same time period. This can be attributed to an approximate 24% rise in the price of gasoline in the past year . So, one thing is clear: gasoline prices are rising enough that people are making a concerted effort to reduce consumption. To predict what this could mean for the future of transportation it is important to understand why gasoline prices fluctuate and what are the options in the market today for people who want to reduce their consumption.
Worldwide, gasoline prices increase primarily based on the price of crude oil. The price of crude oil varies due to worldwide demand and occasionally due to disruptions in exporting countries such as Iraq, Venezuela, and Nigeria . Additionally, short term gasoline price variations can be caused by seasonal changes in demand. Worldwide demand is steadily increasing due to growing populations and economies in India and China. If we aim to decrease the price of gasoline by decreasing demand, it will have to be within our borders. Exporter disruptions on the other hand are erratic and cannot be controlled. The only way to avoid disruptions is to decrease dependence on foreign crude oil sources.
So, what are the options in the market today for the consumption conscious citizen? As of now it is battle between highly efficient cars and completely electric/ primarily electric vehicles. Due to lower prices, highly efficient petroleum cars are currently more attractive. However, looking long term, it might not be unwise to bet on electric. First of all, buying electric seems to be the only ‘cure-all’ for the driving forces for high gasoline prices: demand and foreign dependency. Currently in the United States, about 95% of transportation relies on gasoline . If primarily electric cars were to be widely used, the worldwide demand for oil would decrease, thus decreasing oil prices. Consequently, when trips surpassed the 25-50 miles (the limit of the current batteries in electric vehicles ), reserve gasoline would theoretically be cheaper. Additionally, the United States is much more capable of producing electric power locally with vast coal, natural gas, and renewable reserves. This would help solve the problem of exporter disruptions by making the United States more energy independent.
This being said, electric cars were decidedly not very successful in sales in their first year on the market. However, new policy and new venders give electric cars some hope. Many other car companies besides Chevrolet are releasing electric cars in the coming year. These companies include Ford, Mitsubishi, Coda Automotive and Tesla Motors . As far as policy goes, Jerry Brown, the Governor of California, is recorded saying he would spend $100 million dollars on plug-in stations for electric cars throughout the state. Additionally, AAA, the popular car service organization, has started testing roadside service specifically for help with recharging vehicles .
Although electric cars still face many challenges including high prices and short capable distances, it is possible consistently rising gas prices could act as a catalyst to encourage production and consumption of this new type of vehicle.
 US Dept. of Energy, “U.S. Primary Energy Consumption by Source and Sector, 2008” (2009)