Staying home despite lower gas prices

Gary Sumner is thrilled to see gasoline prices dropping nationwide, and they fell again Monday in most places. Even so, he’s not hitting the road this winter for any big Christmas trips.

Like many Americans, last spring’s soaring gas prices taught him a few things about being thrifty, and with the nation’s economy in a deep recession, he is still consolidating errands, watching his gas gauge and rethinking travel plans.

The price of regular self-service gasoline fell 0.6 cents to a national average of $1.653 a gallon over the last week -- the lowest level since 2004, according to the Energy Department’s weekly survey of filling stations Monday. California’s average price rose for the first time in 26 weeks to $1.806.

But drivers remain cautious. Americans are on pace to record their fewest holiday mile totals in several years, according to AAA, the auto club. And economists say U.S. drivers are likely to remain reserved in their driving habits in the months ahead.


“Originally, the reduction in driving was a consequence of the increased cost of gasoline” this year, said Michael Sivak, a research professor and head of the University of Michigan’s Transportation Research Institute’s Human Factors Division. “Now, it is the general economic situation that is the likely cause of the continuing decrease in driving.”

Sumner, who lives in the gold-mining country of Nevada City northeast of Sacramento, is retired, living on a fixed income and feeling that pain as acutely as anyone. The last time he summoned the nerve to look, his individual retirement account had lost about $100,000. Sumner said he was living through the worst economic conditions he had ever seen in his life.

“Unfortunately, a lot of my money was in stocks,” he said. “Hopefully, I’ll be able to hang around long enough to recover most of what I lost. That will have to happen before I start driving a lot again.”

The economy again damped energy markets Monday, sending crude oil futures for February delivery down $2.45, or nearly 6%, to $39.91 a barrel on the New York Mercantile Exchange. Oil futures have plunged 70% since climbing above $147 in July.


California’s average at the pump rose 6.8 cents to $1.806 a gallon as the state’s energy commission reported a sharp drop in refinery production. It was the first price increase in the state since hitting an all-time high of $4.588 in June.

Drivers such as homemaker Lea Isaac were able to find gasoline for less than the state average. On Monday she needed less than $18 to fill her 2006 Toyota Prius with $1.59-a-gallon gas at the Sam’s Club pump island in Long Beach.

But instead of the extended brood gathering in San Diego from other parts of the country, Isaac said, she and other family members decided this year to plan a rare holiday at home in Southern California with immediate friends and family.

“None of us really feel very good about the economy. All of us are assuming that what we hear is probably accurate, that things are probably still going to get worse, maybe a lot worse, before we see a turnaround,” Isaac said. “So, deciding to stay home and spend less and have a little gathering seemed like a good idea.”

About 63.9 million Americans will travel 50 miles or more from home during the Christmas holiday travel period, representing a drop of 1.4 million travelers, or 2.1%, from about 65.3 million last year, according to the AAA holiday driving report released late last week. The AAA said it was the first decline in Christmas holiday travelers since 2002 and marked a decline during all five of the major travel holidays this year: Memorial Day, the Fourth of July, Labor Day, Thanksgiving and Christmas.

“Without question, the economic downturn of 2008 eroded the discretionary income many Americans would have spent on travel and, for some, altered their travel plans throughout the year,” AAA Chief Executive Robert L. Darbelnet said in a statement.

Many Americans are expecting more of the same bad economic news in early 2009, which is part of the reason for their conservative travel and spending habits, said Nancy Sidhu, chief economist for the Kaiser Center for Economic Research at the Los Angeles County Economic Development Corp.

“You have to look long and hard to find any good news about this economy. Gasoline prices is one of the pieces of good news,” Sidhu said.


But, she added, “people still aren’t responding. You would expect more travel and higher purchases of cars and light trucks, and we are seeing neither.”

So far, Sidhu said, there is still very little confidence and too much worry about the economy heading into 2009.

“Those without jobs have no money to spend. Those who still have jobs are very concerned,” she said. “Almost everyone I talk to says they aren’t spending as much or not taking the trip they had planned because of the possibility that we are in the middle of a very deep recession.”

That was the warning that came out of a report released Monday by the outplacement consulting firm Challenger, Gray and Christmas in its 2009 jobs outlook report. The firm said that an additional 1 million jobs could be cut from the U.S. economy in 2009.

One California businessman who feels a severe economic pinch is computer repair store owner Robert Harrold of El Centro. Harrold estimates that his business is off 30% to 40% this year as fewer people call in for computer repairs.

It’s one of the reasons that Harrold’s holiday driving has been cut by at least one third, he said. He will take one long drive, to the Lemoore Naval Air Station just south of Fresno, to see his daughter, son-in-law and new grandchild.

“That’s one thing I couldn’t pass up,” Harrold said.