ANTHONY BROOKS, host:
From NPR News, it's DAY TO DAY. So it looks like economic uncertainty and high gas prices might be finally affecting our driving habits. Americans' gasoline buying is off by an average of 1.1 percent from a year ago, according to new government figures. MARKETPLACE's Nancy Marshall-Genzer joins us now to talk about what's going on. Nancy, what's causing Americans to curb their demand for gas?
NANCY MARSHALL-GENZER: Well, Anthony, a couple of things. Consumer prices were up more than four percent in January. Now, we also have a weak economy, and in a weak economy with inflation people keep a closer eye on their spending. That affects our driving, according to Doug MacIntyre. He's an oil market analyst at the Energy Department.
Mr. DOUG MacINTYRE (U.S. Department of Energy): They'll spend less. If they're spending less, that means they're going to the store less. As the economy falls, if people are out of work, that's less driving that they're now no longer commuting.
BROOKS: Of course it doesn't help that gas prices are also climbing. Have they finally gotten so high to really affect demand, Nancy?
MARSHALL-GENZER: It appears they finally have. Believe it or not, at first consumers thought, oh, $3-a-gallon gas prices are temporary, but when it started to sink in that high prices were here to stay, people started actually driving less.
BROOKS: Now, the all-important summer driving season will soon be upon us. Is demand going to tick up this summer and nudge prices up even farther?
MARSHALL-GENZER: Well, not necessarily. Economists normally don't like to stick their necks out and forecast prices, but one analyst I spoke to today, Justin Perucki of Morningstar, said we won't see a big spike in prices this summer if everything runs smoothly. That's a big if. That is, if there's not an outbreak of violence in oil-producing countries and as long as U.S. refineries run smoothly.
Mr. JUSTIN PERUCKI (Analyst, Morningstar): We saw last year a lot of fires, a lot of disruptions, and if that were to happen again this year, we definitely could see a major shock to the system translate into $4 per gallon of gasoline.
BROOKS: Four dollars, wow. Now, does it help at all that gasoline inventories in the U.S. are high right now?
MARSHALL-GENZER: You know, it helps a little, Anthony. But again, if everything runs smoothly. Inventories are up. That's true, because there's been this drop in demand, but that always happens during the winter, and demand usually goes up a lot in the summer, and usually refineries are able to pass higher oil prices along to consumers at that point. But if demand doesn't pick up and we have big inventories of gasoline sloshing around, refineries aren't going to be able to do that.
Now, another thing to keep in mind that could actually nudge prices up is, you know, we're competing for oil with a lot of growing economies. India and China, they have voracious appetites. We already consume about 25 percent of the oil that's produced in the world, but we have a lot of competition right now.
BROOKS: Okay, thanks. That's Nancy Marshall-Genzer of public radio's daily business show, MARKETPLACE, produced by of public radio's daily business show MARKETPLACE, produced by American Public Media.
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