U-M Energy Survey finds that most consumers wouldn’t make big changes in how they drive until gasoline prices rise increase by more than 80%
If the price of a gallon of gas ever gets close to $6 a gallon, the cost of filling the average mid-size car will go to nearly $96 per tank. That’s also the point where most Americans say gas would be unaffordable, according to the latest University of Michigan Energy Survey.
With the national gasoline price averaging $3.39 per gallon in January 2014, when the 18-question U-M energy survey was taken, it would take a price hike of 83 percent to push average prices to $5.96 per gallon before gas became too expensive for survey participants. That cost didn’t vary significantly from the $5.90 estimate U-M researchers found in their inaugural October 2013 survey.
That price level would be more than 50 percent higher than gas has ever been in the United States. The average national annual price of a gallon of regular fuel, adjusted in constant dollars for 2015, peaked at $3.80 in 2008, according to the U.S. Bureau of Commerce.
“Unaffordable” was defined as the point where gas prices became expensive enough to prompt drivers to make significant changes in when and where they drive.
The latest survey also reveals that consumers remain much more sensitive to increases in gasoline prices than in the cost of energy used to power their homes. While survey respondents said they’d find gas unaffordable after a price increase of more than 80 percent, the same survey participants said their home energy costs would need to more than double, increasing by at least 130 percent, before they’d start making big changes to cut costs.
The point at which a fill-up becomes a financial downer varies by household income and other factors, the survey revealed, a trend also seen in the October survey. Top income earners said that gas prices would have to get much higher to become unaffordable as compared with middle- and lower-income households.
The point at which gas becomes affordable for households in the top third of incomes is $6.75 a gallon, according to the January survey, while households in the middle and lower thirds of income pegged that price at an average price of about $5.50 per gallon. The same kind of split was seen between consumers who owned homes in the top third of property values versus those in the middle and lower segments.
U-M researchers were able to identify how many consumers already find gasoline to be unaffordable. That figure was about 3 percent of all survey participants, and didn’t show any significant changes across incomes, home values or ownership, or regions of the country
The unaffordability level rises to 12 percent when survey participants were asked where they think gas prices will head during the next five years. In January, respondents said they felt prices would rise to an average of $3.72 per gallon, 10 percent higher than the $3.39 per gallon national average at the time. Looking at income levels, 5 percent of respondents from higher-earning households said gas would be unaffordable for them in five years, compared with 18 percent of participants in the bottom third of household incomes