Rising gas prices have much less effect on demand than they once did

Twin Cities gasoline prices have ratcheted up over much of the past month, hitting an average $2.65 on Tuesday.

Ho-hum.

"We're actually using more gas, at $2.65, than when it first reached $2.65 in 2005," said Jason Toews, co-founder of the website Twincitiesgasprices.com.

People have become used to seeing prices bobble around at the pump. After briefly hitting an average $3.13 a gallon last July, Twin Cities gasoline prices gradually fell to a low of $1.86 in January. Prices have zigzagged upward ever since.

Lately, even with the clock moved ahead early this year in a bid to save energy, the trend has been for motorists to buy more gasoline, rather than less.

"People are out more, driving to more places because of the earlier advent of daylight savings time," Toews said.

The trend can be seen nationwide, as well.

"It hasn't seemed to change much in the way of what people are buying or [carmakers are] planning, either," said Kristin Dziczek, senior project manager at the Center for Automotive Research in Ann Arbor, Mich.

Small-car sales rose in midsummer, with the arrival of $3 gasoline. But as soon as gasoline prices broke, so did customer demand for small cars, which led to a skid in fall sales.

"It's not that big a chunk of the average person's pocketbook," Dziczek said.

"With $5 gas, people would wake up. At $2 or $3, we've been there before. It doesn't change habits or product plans."

Americans bought 9,491,000 gallons of gasoline the week that ended March 30, 428,000 gallons more than a year earlier, according to the Energy Information Administration of the U.S. Department of Energy.

It will take sustained higher prices than Americans have seen for motorists to cut demand at the pump.

"Our experience over the last couple of years is that the price needs to get close to $3 a gallon before we see a noticeable drop in growth," said Douglas MacIntyre, senior oil market analyst at the Energy Information Administration.

Note that he said "drop in growth."

Even at $3 a gallon, demand for gasoline grew, albeit at a slower pace than earlier. At $3, gas demand grew at a pace of about 1 percent, rather than a more typical 1.5 percent to 2 percent, MacIntyre said.

"People need to feel like the prices will remain at some specified level" before changing driving habits or choosing more fuel-efficient cars, he said.

Mike Meyers • 612-673-1746 • meyers@startribune.com