ALEXANDRIA, Va. — The news
is decidedly mixed as it relates to consumer confidence about the economy. On
one hand, U.S. gas consumers headed into July more optimistic than they have
been all year. However, given that consumer sentiment closely tracks gas
prices, this optimism may be short-lived as oil prices spiked to 16-month highs
and gas prices have followed suit over the past two weeks.
The third quarter began
with consumer optimism regarding the economy at the highest level recorded this
year — 48% of consumers expressed optimism while only 52% expressed pessimism,
according the latest monthly NACS Consumer Fuels Survey. The national consumer
survey was fielded July 12-14, when national gas prices averaged under $3.50
per gallon, based on reported weekly gas prices from the Oil Price Information
Service (OPIS).
A huge percentage of
consumers (86%) surveyed said that gas prices impacted their feelings about the
economy in July.
“Gas prices play a big
role in defining consumer sentiment and that continued in July,” said NACS Vice
President of Government Relations John Eichberger. “For the past seven months,
consumer sentiment has risen or fallen along with gas prices, and consumers
were clearly in a good mood as July began. However, the steep increase over the
past few weeks is a strong indicator that we could see a spike in pessimism in
August and it is something that we will closely monitor in our next survey.”
While consumers expressed
more optimism in July, nearly two thirds of consumers (64%) surveyed also said
that they expected gas prices to climb over the coming 30 days. In light of the
recent price increase, it’s logical to wonder at what point gas would get so
expensive that consumers would try to reduce the amount they drive. On average,
consumers said that price is $4.11 a gallon, which is coincidentally the record
average national gas price reached in July 2008.
Gas prices would have to
reach nearly $5 per gallon before consumers say that they would seek out an
alternative to driving or drive drastically less. The mean price cited by
consumers was $4.93 per gallon.
“While the second half of
the year began with much promise, retailers in all channels may be in for a
bumpy ride over the coming weeks. This may be particularly acute for fuels
retailers who squeeze margins to fight for customer traffic when gas prices
rise,” said Eichberger.
Every month, NACS conducts a nationwide survey in
partnership with Penn, Schoen and Berland Associates LLC to measure consumer
perceptions about gas prices and how they relate to broader economic
conditions. For the July survey, 1,266 gas consumers were surveyed from July
12-14, 2013. The margin of error for the entire sample is +/- 2.75 at the 95%
confidence interval and higher for subgroups. Some percentages may add to more
or less than 100% due to rounding. The OPIS weekly national average price for
gas was $3.479 on June 8. Summary results from this and previous surveys can be
found at www.nacsonline.com/gasprices.