There has been plenty of talk about how the high price of oil is changing habits for American consumers. American's are finding ways to save money by combining shopping trips, finding alternative ways to get to work, and trading in their SUVs. The pain that American's are just beginning to face is very real. But note the key words, "just beginning". While demand is softening in the United States, demand worldwide is still quite strong and getting stronger. On the other end, supplies are still restricted and it doesn't seem like OPEC can do much about it.
The change in behavior hits all segments. Its funny how that can happen even to the people that it doesn't really affect. That's the problem with inflation, its all about expectations. If people expect inflation, it happens. With the expectation of inflation people are going to change their behavior. Take myself for example. I do think about the price of gas and I let it affect my decisions. While I am still driving to work (having decided the train isn't for me) I'm taking my girlfriend's car that gets better gas mileage. I live close to lots of stores, and have resorted to walking so long as I don't have to carry anything back. My weekly trips to Best Buy just to look? Curtailed it and now I only go when I'm headed in that direction anyway. So if this is affecting someone like me, one can only imagine what it is doing to the rest of the population.
With oil now back under $130 (it's odd that people now think of $130 oil as low) and looking weak, will this trend continue? If we suddenly wake up and oil is "only" $80 or even $50 a barrel, will America's addiction to oil continue, or did this summer's events just let the genie out of the bottle? However awful it sounds, I actually hope that oil stays high. I see people making changes, and they are changes that I think are good in the long run. I would hate to see energy prices suddenly fall and people go back to the way things used to be because the next time it happens, it will be like the boy who cried wolf, only this time it will be the boy who called high oil prices.
What about you, have you let high gas prices change your habits? Do you think high prices are here to stay?