The slow but steady rise in prices in 2010, largely motivated by 25-month highs in global crude [image-nocss] oil prices, has resurrected an old argument among consumer analysts and economists. Would pain-at-the-pump crimp holiday spending, or alter behavior after the 2010 shopping season is complete and the bills come due?
A new study to be released by PortiaGroup with data provided by OPIS looks at some of the likely consequences of the gasoline price surge. The study, "Consumer Reaction to High Gasoline Prices: What It Means for Retailers," concludes that rising gasoline prices are more relevant to household budgets than a cursory glance at numbers might indicate.
The study cites evidence that higher fuel prices motivate "stunning" behavioral changes in shopping patterns and influence choices for premium versus discount merchandise well beyond the realm of fuel.
For example, on a national basis, the average household will spend about $305 on gasoline in December 2010, up 13.6% from last year, but up 76% from December 2008 when consumers paid about $1.65 per gallon for fuel. This year's numbers represent an average 7.4% of median household income. That is up 6.5% from last year, and compares with a 4.2% bite in December 2008.
Households in Montana endure the greatest fuel price damage to budgets; they currently see gasoline expenses that reflect about 12.7% of family income. Mississippi is next on the list with families there spending about 12.3% of household income on fuel. Southern states tend to see greater fuel expenses than wealthier states in the Northeast, upper Midwest, and on the West Coast with Louisiana, South Carolina and Arkansas households all yielding data that suggest fuel costs well above 10% of income.
Higher-income areas in the Northeast see less of a bite. The average household in New York will spend less than half the amount that Montana or Mississippi families might expect to pay for fuel, and the aggregate expense totals just 4.71% of income. But New York families have nevertheless seen a rise of more than 12% from last December, according to the study. Other states where fuel costs account for less than 6% of household income include Maryland, Massachusetts, Nevada, Illinois, Hawaii, Colorado and Minnesota.
Wall, N.J.-based Oil Price Information Service (OPIS) is a comprehensive source for petroleum pricing and information.
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