As gas prices rise, so do sales


Saturday, April 21, 2007 | No comments posted.

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PORTLAND (AP) - As gasoline prices rose last year, Oregonians bought more of it.

Some observers think that many Oregonians were feeling flush in a good economy, and vehicle dealers responded to the rising fuel prices by marking down the gas guzzlers.

That led buyers to think they could afford both to buy and to fill the big rigs.

“They say, ‘Gee, if these things are getting marked down $3,000 or $4,000, that'll buy an awful lot of gas,”' said Dave Kavanaugh, chief economist at the Oregon Department of Transportation. “It offsets the pain of going to the pump.”

For last year, Oregonians bought about 142,000 gallons more each day on average than the year before, federal Energy Information Administration statistics show.

In the rest of the country, though, people on average used less gasoline as the price spiked.

Still, gasoline consumption is lower in Oregon, on average, than in the rest of the country.

State analyses suggest higher gasoline prices aren't pushing down consumption in Oregon as much as they did only a few years ago.

Generally, a 10 percent increase in the price causes a roughly 1 percent drop in use, Kavanaugh said.

In the past few years, though, increases of that magnitude have caused gasoline use to drop only about half as much, suggesting that demand is less flexible. Consumers have vehicles that consume a certain amount of fuel, no matter the price, and demands such as driving to work that they can't readily change.

Indications are that the overall fuel efficiency of cars in Oregon is not improving.

Oregonians are burning more gasoline, for example, but driving fewer miles on state highways, suggesting vehicles burn more per mile.

“The only obvious explanation is that despite the fuel prices, people are still buying the big SUVs,” said John Merriss, policy unit manager at the Department of Transportation.

The gross weight of new Oregon vehicles rose almost 25 percent between the early 1980s and the early 2000s, Merriss found.

Vehicles of more than 4,000 pounds - the range of a Chevy Blazer and larger - are an example.

In the early 1980s, they accounted for fewer than 10 percent of vehicles registered. Two decades later, they were about 30 percent.

“People say, 'Oh, yeah, I'd love to have more fuel-efficient cars,' but when I drive down the road, I still see a lot more SUVs and trucks than I do hybrids,” said Denton Cinquegrana, West Coast markets editor for the Oil Price Information Service.
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