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Californians slam brakes on gas use

Published: Saturday, Apr. 4, 2009 - 12:00 am | Page 1A

An economic meltdown may not be the preferred way to scale back California's dependence on foreign oil, but it seems to be doing the trick.

Gas consumption in California continues to fall, even with gas prices far lower than the record highs set last summer, new figures from the California State Board of Equalization show. Some economists credit the poor economy for the trend.

Unemployed people don't drive to work. Car sales are down. And suburban growth is sputtering. All of which promotes lower fuel usage.

"The impact of drops in income on gasoline consumption are actually quite large," said Chris Knittel, an economics professor at UC Davis.

Another economist, Severin Borenstein, director of the Energy Institute at UC Berkeley, said the economy may have little to do with the decline in consumption; rather, he said there is a lag between price drops and increased usage.

Californians started using less gas beginning in 2007, as prices crept upward. By the summer of 2008, prices topped $4 a gallon, and the trend had picked up too, with Californians using about 200 million fewer gallons of gasoline during the second quarter of 2008 than they did during the same period of 2007.

Now, gas prices are back around $2.25 a gallon, but usage continues to plummet, dropping another 40 million gallons from summer to winter of 2008 and remaining 200 million gallons, or 5 percent, lower than winter 2007.

The benefits of lower gas usage have been widely documented: A potential for less pollution, less sprawl and less American involvement in the Middle East chief among them.

On the flip side, a lot of domestic jobs are directly or indirectly tied to the oil industry, Knittel said. As such, the trend, and what it portends, aren't doing much to help the economy.

For instance, Scott Blevins would, in a way, love to be using as much fuel as before. He's the president and CEO of Mountain Valley Express, a Manteca-based trucking company.

Mountain Valley's diesel usage dropped by 75,000 gallons, or 20 percent, compared with the prior year, during the first three months of 2009.

That's not through economizing. Business, Blevins said, has simply plunged.

Blevins' company mostly hauls industrial and consumer goods, but sales are down, so there's less demand to move those goods between factories or from a factory to a store.

"We went from 400 to 350 employees during the last 90 days," Blevins said, adding that in his company's three- decade history, "it's never been like this."

Diesel fuel consumption is off even more than regular gas usage, state figures show. It fell by 70 million gallons, or 10 percent, year to year during the last three months of 2008.

Aviation fuel consumption also is dropping fast as fewer people fly. It dropped 2.5 million gallons, or 35 percent, in California year-to-year during the last quarter.

On the flip side, mass transit usage is up over last year, as more local residents shunned cars. Locally, Regional Transit has seen bus and light-rail ridership increase more than 10 percent this fiscal year, despite a fare increase in January.

Cosumnes River College student Alex Delgado stopped driving last summer because of high gas prices. He's driving some again these days, but not nearly as much as before.

"I take the bus or light rail," Delgado said. "I don't like people on the road anyway."

There's agreement among economists that gas usage will start to climb again. The only open questions, they say, are when and why.

Borenstein, the Energy Institute at UC Berkeley director, thinks gas usage might already be increasing, noting that the state's newest figures don't cover 2009 yet.

"When you wake up one morning and it costs $2 to buy a gallon of gas, you don't go out and buy an SUV," he said. "These things gradually change."

"I'm quite confident that if prices stay this low, we will see demand start to grow," Borenstein added.

Knittel, the UC Davis economist, on the other hand, believes that usage will rise only once the economy starts recovering. Until more people splurge on cars or climb out of unemployment, demand for gas will stay low, he said.

"My guess, he said, "is that (it is) the decline in the economy first and other sorts of things second."


Call The Bee's Phillip Reese, (916) 321-1137.


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