US drivers steering around high gas costs

Sales figures show interest in SUVs is in rapid decline, but interest in hybrid automobiles is soaring.

Matt Jones just drove his Honda Accord from hereto Las Vegas with the moon roof closed, windows up, air conditioning off, and trunk carefully emptied of excess weight. "I saved a quarter tank of gas each way," he says. "That's a lot of money these days."

Atlanta suburbanite Charlene Mayfield got fed up spending more than $350 a month in gasoline for her 80-mile commute, so she sent an intra-company SOS looking for van poolers. She got a dozen responses in 10 minutes. "Now we each spend no more than $68 a month," she says.

Brett Greenberg, a consultant in Boston who helps firms accomplish more tasks online, says business is up 40 percent. "People are realizing the giant cost savings of not traveling for everything," he says. "That attraction is accelerating rapidly."

As Americans have done in earlier energy crises, they are rushing to take the pinch out of filling up at the pump. While history teaches that such energy-saving changes in behavior are often short-lived, lasting only until prices fall, this time may be different, many experts say. Or at least, they add, it should be.

That's because even though the current swell in prices may be caused by hurricanes Katrina and Rita, the national average had reached $2.61 a gallon before the storms struck.

The long-term trend toward higher gas prices, experts say, will continue. These experts point to the rise of energy consumption in China, Indonesia, the Middle East, and Eastern Europe and say that is unlikely to offset new US and Canadian discoveries in Alberta and in Sakhalin, Russia, and the return to use of damaged Gulf facilities.

Experts say the current situation is a study in what could be done to achieve significant collective and individual savings, should consumers question entrenched habits of gasoline use.

"We've come a long way in understanding how dramatic savings are right in front of us if we just consider new ways of thinking and behaving," says Siim Soot, research professor at the University of Illinois at Chicago.

Besides simple ways of saving gas - from closing moon roofs to reduce drag to properly inflating tires to maximize mileage - there are bigger commuter-lifestyle options such as biking, public transportation, carpooling, and walking. Beyond that are larger questions - from how and where to expand cities and build businesses to the burgeoning development of telecommuting.

"How seriously should we think about making such changes more permanent as we face a future of significantly increased competition for oil around the world?" asks Dr. Soot.

The evidence of change afoot and the possibility for more is all around, he and others say.

A just-released survey by Kelley Blue Book Marketing, for example, showed that 59 percent of current US car buyers say gas prices have either changed their minds or strongly influenced purchase decisions - an all-time high. Forty-two percent say they would seriously consider a fuel-efficient vehicle if gas prices go another 25 cents above the current national average (which was $3.07 per gallon on Sept. 5).

"With prices for gas now skyrocketing above the psychological threshold of $3 per gallon in many areas, consumers are more interested in fuel-efficient cars than at any time in the last two decades," says Jack Nerad, market analyst for Kelley Blue Book.

That is becoming increasingly evident in many American cities, where car owners are trading in gas guzzlers for smaller-engine cars. SUV owners are even downsizing to smaller SUVs. And there are waiting lists at some car companies offering gas/electric hybrid cars, such as the Toyota Prius and Honda Civic Hybrid.

"We can't keep the Civic Hybrid in the stores, people are literally buying them as they roll off the delivery trucks," says Jeffrey Smith, assistant vice president of American Honda.

Hybrid cars have been in growing demand for the past few years because of environmental concerns and the privilege granted by recent laws in California allowing owners to use carpool lanes while driving alone. But the appeal of higher gas mileage in the past few months has created even greater demand, with many buyers offering thousands above the sticker price to get their cars. "What we are seeing now is an exacerbation of the interest in hybrids spurred higher by high fuel costs," Mr. Smith says.

September auto sales figures appear to back up the anecdotal evidence. Sales of the General Motors Corporation Envoy and Chevrolet Tahoe fell more than 50 percent compared to last September, while Toyota's Prius sales increased by 90 percent from the same period last year.

Rising gas prices affect more than just car owners of course, as trucking firms, cab companies, limo services, pizza and flower deliverers all face a recurring multiple-choice test with each new go-around: take a financial hit, go out of business, change services, or pass costs on to consumers.

"Wall Street is beginning to ask big questions on how they get around," says David Popeck, executive vice president for one of the largest limo providers serving the financial community.

After gas prices soared in 2001, his industry lowered rates across the board to hold onto the limo rides it delivered annually - 700,000 at Popeck's firm alone. Now, additional gas prices are forcing $2- to $4-surcharges per ride and the firms that use his service are rethinking how they can change.

"These guys are financial analysts so they know the gas-price situation better than we do," says Popeck. "They are checking with vendors to negotiate longer term deals, looking for ways to share-rides, curtail use, and crack down on abuse from within. And this is a door-to-door, white-glove culture with ego."

How far such changes will go and how fast is far more complex than just gas prices, experts say. But from the seemingly petty, like getting more mileage with closed moon roofs, to the profound, like weighing relative social and economic costs of buses vs. trains vs. cars, the dialog is accelerating full bore.

The answers aren't always as obvious as they seem, these same experts warn. Sometimes cars are cheaper than buses (if the buses aren't full, or ply unused routes). And the additional cost of a hybrid car, may not be economical for the owner who doesn't use it enough.

"There needs to be more examination of mobility by the public and government as a whole rather than each side jumping on quick fixes that may not help in the long run," says Soot.

That examination may need to include an understanding of different responses across social class, cultural, and regional lines.

"We had a panic here but it's already over," says T.J. Campbell, sales rep at Power Toyota/Scion in Tempe, Arizona. He moved to Arizona three years ago after selling cars for 13 years in Oregon. "In Oregon, you can bet people have already started bicycling to work, but here [high gas price spikes] are just another day in the desert for these folks.

"Let's face it, if you are the owner of a luxury car in the $50,000 to $70,000 range, $3 a gallon for gas is not going to bend you out of shape," adds Diane Henson, customer service representative for Keyes Toyota in Van Nuys, Calif.

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