Have We Reached the Tipping Point for Gas Prices?

AAA says yes, but are consumers really driving less?

March 30, 2022

Pouring Yellow Gasoline

By Sara Counihan

ALEXANDRIA, Va.—The national average for a gallon of gas is $4.24, according to AAA, which also says that the tipping point for consumer behavior changes toward gas consumption has occurred. In 2008, NACS Magazine published an article that found $3.71 was the tipping point. But John Eichberger, executive director for the Fuels Institute disagrees—he doesn’t believe there is a tipping point at all.

“What we’ve seen in surveys and behavior over the years is people adapt,” said Eichberger on this week’s Convenience Matters podcast episode. “Typically, whenever you ask them at what point will you change your behavior, buy a different car, it’s always the next threshold. So that point at which people think they’re going to change behavior keeps moving with the price of fuel.”

Although consumer behavior may not be changing because of record-high gas prices, behaviors did change because of the pandemic, and they have not (and may never) return to normal.

“As we’re getting back to whatever the new normal is, you have a percentage of folks who are still working from home, and perhaps what’s changing is the time they’re doing errands,” said Paige Anderson, NACS director of government relations, who also appeared on this week’s episode. “The reality is people are still driving.”

Anderson also points out that this period of high gas prices is happening during a very high inflationary period and a disrupted supply chain, which is different than prior high gas price periods.

“The reality is [that] gasoline is the No. 1 thing folks have to buy after housing,” said Anderson. “You’re going to find folks cutting their budgets elsewhere, not necessarily on fuel because … they’ve got to get to work and do the errands and get their kids to soccer practice.”

Electric vehicles (EVs) usually come into play when discussing a tipping point for consumer behavior and what habits they would change, said Jeff Lenard, NACS vice president of strategic initiatives, the host of this week’s episode. Lenard said that according to a recent NACS consumer survey, respondents believe that 15% of the cars on the road are EVs, but the actual amount is less than 1%.

“The EV commercials, the drumbeat about EVs, has taken hold with consumers,” said Lenard.

Eichberger said although headlines are touting an EV revolution, it’s really more of an accelerating evolution. Although EV sales are on an upward trajectory, the supply chain and microchip shortage are going to continue to influence the penetration of EVs.

“EVs are going to continue to gain market share, but it’s not going to be nearly as rapid as some of the advocates think it’s going to be because of natural progression of market,” said Eichberger.

“You’re seeing more [EV] options, more education, but the reality is even if you went to a car dealership right now and had the money to buy yourself an EV, they’re not available,” said Anderson, who added that there is a 12- to 24-month waiting list to purchase an EV, as well as smaller economy or high-efficiency vehicles, plus vehicles are at a premium rate because of supply and demand issues.

“It used to always be, what are the challenges to getting EVs in the marketplace? And it was usually cost, range anxiety and consumer choice,” said Anderson. “You’re seeing all of these addressed, but it’s not going to happen overnight.”

Don’t miss this week’s Convenience Matters podcast episode No. 329 “What’s the Tipping Point for Gas Prices?” to find out more about the gas price tipping point for consumers and what it means for the summer driving season.

Each week a new Convenience Matters episode is released. With more than 300 episodes to choose from, the podcast can be heard on Apple Podcasts, Spotify, Google Play and other podcast apps and YouTube and at www.conveniencematters.com. Episodes have been downloaded more than 250,000 times by listeners around the world.

Sara Counihan is contributing editor of NACS Daily and NACS Magazine. Contact her at scounihan@convenience.org.