When US gasoline prices shot to $4 a gallon in 2008, sticker shock cut fuel demand and helped send world oil prices tumbling by more than $100 a barrel in just five months.
Pump prices have returned to near those highs, averaging $4.0 a gallon after rising 36% in a year. Oil has also soared, with brent trading above $122 a barrel.
But this time, there are ample reasons to suspect $4 US gasoline won’t slash demand or trigger another oil price rout.
Outrage over prices among American drivers, who consume an eighth of the world’s oil, is turning into resignation with summer driving season around the corner. Experts say the tipping point at which prices would slash demand has likely risen sharply since 2008.
“In 2008, $4 gasoline prices were almost inconceivable. They won’t be viewed the same way this time,” said Lars Perner, a consumer behavior expert at the University of Southern California.
Several other market shifts also make a demand collapse less likely. Although new cars are becoming more fuel efficient, fewer Americans are buying them, and the average age of a US passenger vehicle is 10 years.
Unlike in 2008, when the US economy was entering a tailspin, employment has been rising, pushing more commuters onto roads and making them less anxious about paying for fuel.
US gasoline consumption peaked in 2007 and has since fallen 13%, or 1.2 million barrels a day on average.