High Prices Won't Curb America's Thirst for Gasoline

High Prices Won't Curb America's Thirst for Gasoline
Seeking Alpha ^ | April 05, 2011 | by Devon Shire

Posted on Tuesday, April 05, 2011 11:06:37 AM by Red Badger

As an investor with significant exposure to oil prices, I'm always worried about something like the financial panic of 2008 that might trigger a quick drop in the commodity. One thing I'm not overly worried about is the American public kicking its addiction to oil any time soon.

For years I've always gotten a big kick out of analysts on CNBC talking about how $2 then $3 and now $4 per gallon for gasoline would kill the demand for the product in the United States.

[snip]

And that is a bit strange, considering that Canadians pay quite a bit more than Americans at the fuel pump. Last week AAA's fuel gauge report showed that the average price per gallon in the United States was $3.59. In Canada we are at $5 per gallon in many parts of the country.

You would think that $5 per gallon would change your fuel consumption habits. It hasn't. And $4 per gallon or even $5 per gallon in the United States isn't going to change much, either. Sure, if the price of gasoline jumps from $3.50 to $5 in the span of six months, there will be some short-term reaction. But over the long run, Americans aren't going to be willing to significantly stray from the personal freedom a car allows.

And if you think Canadians have it bad, consider some of these prices per gallon where citizens still drive cars on a regular basis (from AAA):

Turkey: $9.63 per gallon Norway: $9.27 per gallon Greece: $8.50 per gallon Denmark: $8.42 per gallon Sweden: $8.18 per gallon United Kingdom: $8.17 per gallon

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