Demand falls, but energy prices remain a big worry
By Brad Foss
Associated Press
Capitol Trailways recently doubled the number of buses it runs on weekends from King of Prussia, Pa., to New York City, suggesting to company president Joshua Bennett that the sign he put in front of the station is working.
It says: "Sky high gas prices? Commute to NYC on the bus."
There's growing anecdotal and statistical evidence that soaring fuel costs are altering behavior — from a sharp decline in SUV sales to a late-summer surge in bicycle sales to government data showing a 3 percent drop in gasoline usage last month.
Yet even though gas prices may drop due to the weaker demand, home-heating costs are expected to surge this winter and that may force consumers, especially the poor, to cut spending on clothing, healthcare and food.
Waiter and actor Greg Foshay of Studio City, Calif., said he bikes and walks as much as he can and even started riding the train a year and a half ago to save money on gas, which averages $2.93 a gallon nationwide. But he still drives to auditions.
"My Ford Ranger has a 20-gallon tank, but I haven't filled it up all the way in years," Foshay said. "It's too much of a hit."
Some energy-intensive industries are also trying to cut back:
Jet fuel purchased on the spot market in New York now costs $2.41 a gallon, or about 60 percent more than last year.
It is too soon to tell whether the pullback in energy demand is more than a short-term response to the price spikes after hurricanes Katrina and Rita.
But the shifting winds — including repeated calls for energy conservation by the Bush administration — are already being reflected on energy markets.
Crude oil for November delivery fell 7 percent this week, settling yesterday at $61.84 per barrel, while gasoline futures plunged 14 percent this week to finish at $1.8292 per gallon.
"Katrina really increased the anxiety about gasoline prices in the U.S., and calls for conservation only add to that," said James Burkhard, global oil director at Cambridge Energy Research Associates in Cambridge, Mass.
Burkhard cautioned against drawing firm conclusions from Energy Department data that show gasoline consumption over the past four weeks was 2.6 percent below year ago levels.
