Americans Drive Less for First Time in 25 Years

Americans Drive Less for First Time in 25 Years

By Bruce Nichols, Reuters

HOUSTON (Nov. 30) - High gasoline prices not only slowed fuel demand growth and cut sales of gas-guzzling vehicles in 2005, they also prompted Americans to drive less for the first time in 25 years, a consulting group said in a report Thursday.

The drop in driving was small -- the average American drove 13,657 miles per year in 2005, down from 13,711 miles in 2004 -- but it is more evidence that the market works and prices help control consumption, Boston-based Cambridge Energy Research Associates said.

"Price matters," CERA Chairman Daniel Yergin said.

The group's 2007 edition of "Gasoline and the American People" shows the U.S. romance with automobiles is changing, but not ending, due to tighter environmental rules, expanded fuel options, such as ethanol and biodiesel, and an aging of the population, CERA said in a news release.

U.S. motorists are currently paying up an average of $2.247 per gallon at the pump, down from a record $3.057 struck in September 2005 after Hurricane Katrina disrupted U.S. Gulf Coast refinery operations, according to AAA motor club data.

The share of U.S. household budgets going to gasoline and oil has been relatively stable for decades, at 3.8 percent in 2006, compared with 3.4 to 3.6 percent in the 1960s, due to low fuel taxes and improved vehicle efficiency, the report said.Miles driven per motorist was down partly because there are more elderly people driving, and they tend to drive less, the report said. Between 1980 and 2004, drivers under age 21 dropped from 18.8 million to 15.8 million and those over 65 almost doubled, from 15.4 million to nearly 29 million, CERA said.

Average annual miles per vehicle also declined last year, from 11,946 to 11,856. That number for cars is smaller than average miles per motorist because there are more cars than licensed drivers in the United States, 1,148 per thousand, CERA said.

Growth in U.S. demand for gasoline slowed from an average 1.6percent per year between 1990 and 2004 to 0.3 percent in 2005 and 1 percent in 2006, the report said.

Sales of vehicles with lower gas mileage "have begun to slump, with monthly, seasonally adjusted sales reportedly declining nine of the 12 months ending September 2006," CERA said. "Weakness is most pronounced for the heavier class of SUVs."

The report said sales of minivans and sport utility vehicles peaked at 56 percent of all vehicles sold in 2004, but slipped to less than 55 percent in 2005 and 53 percent so far this year.

11/30/06 12:19 ET