December 05, 2008
Now that gas prices have fallen below $2 per gallon, and oil prices continue their plunge, metro Atlanta's October gas crisis seems a distant memory that probably won't change consumer habits much.
"I don't know if we were up long enough for it to have impact on consumer patterns," said Frank Norton Jr. of Norton Native Intelligence. "Had it been up for a long enough time, I think we would have seen some hesitancy on purchase of SUVs. But now that it is down I am afraid that memory is going to be very short and we may just rever back to some of our old, gass guzzling habits.
Fuel surcharges are being dropped for some of the outlying areas for utility companies, a sign of the dropping gas prices. Even if a surcharge hasn't been added, those costs are a hard expense that is an indirect cost tacked onto all goods and services. Those higher prices might not drop even though the fuel costs that increased shipping costs have dropped.
Consumers still have a high degree of skepticism, believing the high gas price was artificially created by the gas companies, OPEC and whomever else they think of, a grand conspirac theory.
"Now that it's come down, likewise the general public feels it is being manipulated," Norton said.
Fuel prices have industrial companies rethinking their overall logistics, making them consider how many warehouses they were going to place and the distance between their major distribution centers. Publix is a company that uses a hub and spoke distribution system, with the hub a larger warehouse. They had started to consider an overlay of smaller areas so that transportation could improve because not only gas prices soared, but diesel prices went through the roof.
For consumers, Norton anticipates some stability in gas prices, with 6 to 10 cent prices changes for the next 12 months.
"We are seeing it nose dive, but where is it going to level off?" he asked.
As gas prices rose, less sprawl was expected as houses in the outlying areas became too far out to drive. But now that gas prices are lower, Norton wonders if that question will ever come up again in the search for real estate. A home buyer could find a house in South Forsyth that's much cheaper than across the county line into Fulton.
So the value of the house as a total component became the overall factor rather than cost of gas. With the differential of the cost of gas compared with the size of the house and yard, the cost of the hous eand the size of the yard always won over the commute cost.
What really happened to consumer spending during those weeks of extreme gas prices?
"It was a redistribution of consumer expenditures, not an elimination of them," Norton said.
Consumers were changing some of their patterns in that they were eating less, Retail patterns show they were going out less, or going out to McDonald's or Chili's instead of white tablecloth restaurants. While the high gas prices primarily were caused by metro Atlanta's "boutique" gas formula being in short supply when hurricanes shut down refineries in Texas and Louisiana, today's consumer spending reductions are caused by the economic downturn.
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