U.S. consumers expect gas prices to rise again, survey finds

By Jack Walsworth, Crain News Service

DETROIT (March 6, 2015) — Gas prices in the U.S. may be down, but consumers don't expect the lower prices to last.

The Consumer Federation of America's (CFA) latest national survey revealed Feb. 19 that consumers believe two years from today, gas prices will be $3.20; and they will be $3.90 five years from now. That would be a 50-percent and 80-percent increase, respectively.

“Not only do these consumer expectations match the last major dip and rise in gas prices (2009-14), but they show that consumers understand when gas goes down, it inevitably goes back up,” said Mark Cooper, director of research at CFA.

The CFA also analyzed the last dip and rise in gas prices.

In January 2009, the monthly average price of gas was $1.84 a gallon. Five years later, the monthly average was $3.36.

When gas prices were low in 2009, more consumers bought lower mileage vehicles.

Those purchases would prove to be costly, as consumers who bought a 15 mpg vehicle would spend $6,400 more on gas over the course of five years than had they bought a 25 mpg vehicle.

According to the CFA, vehicle choices within the same vehicle category getting between 15 and 25 mpg were available in 2009. Therefore, buying a higher mileage vehicle wouldn't have required moving to a different class.

“Buying an inefficient vehicle during periods of low gas prices condemns the consumer to wider swings in monthly costs, much higher monthly peaks and a whooping overall increase in lifetime gas costs,” Mr. Cooper said.

In addition, the CFA compared the five-year gas expenditures of buying an 18 mpg vehicle vs. buying a 28 mpg vehicle now, since it is a period of low gas prices.

By using the average prices projected by consumers in the survey, a buyer of an 18 mpg vehicle is likely to spend $5,000 more on gas in the next five years than the buyer of a 28 mpg vehicle.

“What is particularly significant about this choice is that today it is very easy to make a much more fuel-efficient choice within nearly every vehicle category,” said Jack Gillis, director of public affairs at CFA.

The survey also asked consumers to identify the gas mileage they want in their next vehicles compared with their current mileage.

On average, respondents wanted the gas mileage to be 30 mpg, compared to the 25 mpg of their current vehicle.

“Consumers are smart and have long memories,” said Gillis. “So it's no surprise that they still want more fuel efficiency even though today's gas prices may be low.”

This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.