Sunday, May 25, 2008

Roads clearer on Memorial Day due to costlier gas or costlier everything?

My second favorite Big Four firm predicts that this Memorial Day weekend will see fewer cars on the road than has been the case in years past:
American highways and byways could be considerably less crowded than usual this holiday weekend, with motorists staying closer to home or off the road altogether in response to soaring fuel prices, a survey released this week said.

About one-third of all Americans plan to travel this Memorial Day weekend, according to a new report from Deloitte & Touche, but nearly a quarter of them have changed plans due to the pinch at the pump and 12% have cancelled road trips altogether.
Gas prices are something that the public is more interested in than the major media outlets appear to be. Pew reports that while 31% of the public monitored stories on gas prices more closely than any other subject last week, only 3% of total media news coverage was devoted to them. So anxiety over more costly fill-ups could be keeping people from heading to the lake this weekend. If it's not putting an unsurmountable financial obstacle in their paths, it may be putting a psychological one in the way instead.

But rising prices in general are probably what's really to 'blame' for the putative pull-back. If the price of gas had increased $.65 a gallon from last year while other economic indicators remained healthy, it would translate into a whopping $15 more to take a 600-mile roundtrip (26 mpg) to the big lake in the middle of the state compared to last year.

Gas prices are particularly salient because purchases are frequent, relatively large, and more-or-less unavoidable. But it's not just the rising price of oil or corn that is making people tighten their belts. It's the weakening of the US dollar, pushing domestic prices up everywhere, that is causing the (necessary, in my view) pain.

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