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Survey: US Consumers More Likely to Cut Discretionary Spending Than Use Alternative Transportation
26 June 2007
Nearly half (47%) of US car owners are willing to buy a more fuel efficient car should gas prices increase $1, but a strong majority rule out using alternative transportation to offset rising gas prices and are more likely to cut discretionary spending, according to a survey by Discover Financial Services. Discover Financial Services is a business unit of Morgan Stanley, and operates the Discover Card with more than 50 million cardmembers.
The Discover Survey reported that half (50%) of car owners are driving vehicles that get less than 20 miles per gallon.
Nearly 60% of consumers are paying more than $100 a month for gas. As gas prices rise, our survey shows discretionary spending and even living expenses will most likely be reduced. But a dollar increase in gas prices may have a positive impact on the environment as almost half of the car owners surveyed said they would be somewhat or very likely to buy a more fuel efficient car.
—Ed Stolbof, Senior Vice President of Marketing for Discover Financial Services
Although 75% of car owners said they were likely to drive less if gas prices increased $1, there seems to be little support for alternative transportation.
The Discover Survey reported:
61% were not very or at all likely to walk or ride a bicycle;
Less than one in four (24%) were somewhat or very likely to take public transportation;
45% of consumers were somewhat or very likely to carpool;
59% of women said they would be ‘very likely’ to drive less compared to just 41% of men; and
Nearly one-third (29%) of women also were more likely to use carpools versus 21% for men.
The results of the new survey conducted as part of the Discover Spending Confidence Monitor indicate that 80% of Americans find their car very important in their everyday lives. This may explain why car owners are ready to sacrifice non-essential items in their lives rather than their cars if gas prices increase $1, Discover suggests.
According to the survey, if gas prices increase $1.00:
70% of car owners said they will cut back on entertainment spending;
66% said they will change their vacation plan;
64% said they will postpone a major purchase; and
52% said they were somewhat or very likely to cut back on grocery spending.
It appears the first line of defense to lessen the impact of rising gas prices is expense management. Consumers are likely to cut back discretionary spending, but rising gas prices may force some to go a step further by cutting into living expenses as well.
—Ed Stolbof
June 26, 2007 in Fuel Efficiency, Market Background | Permalink | Comments (30) | TrackBack (0)
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Since “green” businesses are popping up left and right, I love that The Social Venture Network is holding a contest to reward business leaders of socially responsible companies! If you know a CEO or high-level person in such a company, please send them to the Social Venture Network site and look for the "Imagine Whats Next" contest.They are holding this contest to reward business leaders for starting or running socially responsible companies. This seems to be a growing trend, and a colleague of mine who works at a non-profit sent it to me.
Posted by: Charles | Jun 26, 2007 9:30:19 AM
Slightly off topic, but since you brought it up Charles...a colleague of mine who works at a non-profit sent me that website to me about the Social Venture Network: I am trying to start a non-profit myself and I can use all the help I can get! Thanks!
Posted by: Adam | Jun 26, 2007 9:35:39 AM
Speaking of which, I was on the Social Venture Network’s website today and came across this contest for socially responsible business leaders: The link is www.svn.org/imaginewhatsnext. It looks like a great way to reward new businesses for working toward the greater good. Definitely a great thing!
Posted by: Bruce McClaine | Jun 26, 2007 9:40:09 AM
This is not surprsing since Mass transit as presently constituted a leftover of 1870's technologies, is not suited to the Amercan city as built over the last hundred years. Only a few enclaves like NYC's Manhattan borough have any kind of reasonableness for mass transit.
It would take a hundred years of rebuilding American cities, factories, and shopping centers, before it made sense.
That's why exhortation doesn't do a damn thing, except make the "concerned", that want others to sacrifice, feel morally superior and good about themselves.
Unfortunately, there are plenty who believe in the philosphy of perfectability of... others. They never learn.
Posted by: Stan Peterson | Jun 26, 2007 10:07:19 AM
This is a BS survey. Sort of.
Every time a mass transit project is debated, opposing politicians pull out these surveys.
Yet, every time they actually do the project, the positive response to it overwhelms them. People simply don't like the idea of mass transit until such a project provides them with easy access to it. Then, once they've tried it, they love it. It happened here in MN. No one supposedly wanted a light rail line. Now it is adding more trains and planning new legs, in order to keep up with the demand. If you build it, they will come. Until it is in place, no one thinks they'll use it. Then it is put in and they realize, "hey this is slick!" Thank you Jesse Ventura for having foresight and pushing it through years ago.
Posted by: darwin | Jun 26, 2007 10:08:37 AM
>That's why exhortation doesn't do a damn thing, except
>make the "concerned", that want others to sacrifice,
>feel morally superior and good about themselves.
As opposed to being selfish and having no regard for anyone or anything? I choose moral superiority. Why is taking mass transit a sacrifice? Does it impinge on your sense of manhood and self-worth? Exhortations don't work because people don't give a damn. While I will agree that mass transit will not work for most Americans given the urban planning mistakes of the past 50 years, in places were it is feasible, people still choose not to use it. For example, in the SF Bay Area, I'm guessing at least 15% of the commuters on the road would be able to take rail to work if they wanted. Instead, people choose to sit in traffic for an hour so they can have the "flexibility" of driving. Employers even provide shuttles to and from train stations. Exhortations only fail because of people like Stan.
Posted by: RL | Jun 26, 2007 10:34:01 AM
In 30 years all mass transit will be dead. Not becuase of man but becuase of microbes.
Drug immune strains are rising faster and faster and it is only a matter of time before a breakout blows it all up in our faces.
1 infected twit riding a bullet train in japan and 5 weeks later execs and leaders suicide like crazy as it just all falls apart.
A crack addict twit stumbled onto the subway in nyc.. immune system shot to hell.. tb and god knows what else merrily dancing around the train... weall know that outcome...
And it will happen more and more until even the supidiest people know not to use mass transit.
Andif you dont expect this you have alot more faith in man anddrug companies then I.
Posted by: wintermane | Jun 26, 2007 10:34:13 AM
I find the numbers in this report (if they're accurate) rather discouraging. People sure don't change their habits in a hurry.
As for public transit. When I lived in Toronto, the subway was great. I didn't even own a car and didn't feel the need to own one either.
Posted by: NeilPackrat | Jun 26, 2007 10:34:44 AM
Stan--
I agree that mass/public transit is inadequate in many places, and poorly matches the as-built cities (sprawl). On the other hand, there are many opportunities to optimize personal travel even within the existing infrastructure (car-pooling, bicycling for some trips, walking, etc. etc.).
While stuck in traffic during my late, unlamented Bay Area commute, I used to daydream about a personal transportation system that would work for the existing suburban reality: 2-seat electric vehicles that could charge in the garage over night, could drive on the existing streets and highways, but would be designed also to run in dedicated, computer-controlled guideways. The commuter drives from home to the nearest guideway on-ramp, then gives control over to the system, which inserts him into the traffic flow and controls his trip to his designated offramp. The guideway is electrified, powering the vehicle and recharging its batteries during the high-speed trip. The driver takes control again as he drives back on to the city streets near his jobsite. Dedicated parking/charging structures would be placed near large employers, etc.
The beauty of such a system is that you keep the flexibility of personal vehicles while greatly reducing GHG emissions, travel time and stress on the commuter. I could read the WSJ (or do some work, I suppose) enroute. It would be expensive infrastructure, but then we are a very wealthy nation--look how much money we blow daily up in the Middle East to no constructive purpose...
Posted by: Nick | Jun 26, 2007 10:39:31 AM
Microbes killing mass transit....???
That's some funny sh#t man.
Humans and microbes have coevolved for the entire history of mankind and will continue to do so. It hasn't killed us all yet and never will (culling, yes, extinction, no). As long as mankind still inhabit the earth, we will need to move around and coexist with others, and that involves transit.
Posted by: darwin | Jun 26, 2007 10:56:31 AM
I liked the train system in Atlanta and used it more than the compact I rented.
I can't wait until the lightrail line in Seattle is finished. I will ride from the Eastside to the airport any time I have to go on a business trip...right now I use the bus on occassion, but only to go to the airport or on the weekends. Being able to kick back, read a newspaper, stare off into space, or take a nap sure beats the heck out of avoiding idiots who don't like to pay attention to the road and their surroundings.
Posted by: Patrick | Jun 26, 2007 11:01:22 AM
I wonder if people were thinking of buses when they were thinking of mass transit. That would account for the reluctance to use them. Even a bicycle is faster than the bus on most routes.
Posted by: NeilPackrat | Jun 26, 2007 11:29:24 AM
I think it's more to do with our love affairs with our cars. Some people put more time into maintaining their car than their relationships. People just can't look beyond the family car concept, it's been a fixture in our lives since we were born.
Posted by: darwin | Jun 26, 2007 11:42:54 AM
New York, USA's largest city, services 80% of commuters via mass transit. Works just fine and is accepted by all.
Wintermane,
The human immune system is designed to combat those microbes and appears to have done a reasonable job given the planet's burdensome population.
Posted by: gr | Jun 26, 2007 11:48:43 AM
Nick,
They are building your system, or close to it at Heathrow Airport. See http://money.cnn.com/magazines/business2/business2_archive/2007/06/01/100050977/ and for more information on other systems: http://faculty.washington.edu/jbs/itrans/
and the infrastructure is not all that expensive -- just new.
The problem with mass transportation is the emphasis on "mass." We as someone said, we are working from 1870's technology, or at least operating paradigm. Bring a big box to carry a lot of people because it costs a lot to build the box and pay a driver. The big box only comes around when enough people are waiting (not frequent enough) and stops to pick up passengers every block or two (to fill the box). Therefore, it is infrequent, and slow. Eliminate the stops, downsize so you don't need a lot of passengers, and automate most of the trip and what have you got? PRT. More ideal would be dual mode (automated and on road driver controlled), but fast and convenient would be fine.
Personally, I don't ride the bus to work because it takes as long between bus arrivals as it does for me to get to work, not to mention all the stops on the way, and thend a transfer. Change the system and people will use it.
Posted by: JMartin | Jun 26, 2007 12:26:41 PM
It's a sad state of affairs when a majority of people say they would cut back on food to accommodate their driving.
I'm guessing that if gas prices really did go up $1, more people would discover just how much of their driving is non-essential.
Posted by: Peter | Jun 26, 2007 12:50:13 PM
Stan, have you ever been in a city with good public transport? I've spent some time in London, and rarely used a car. Where I live now, it would be essentially impossible to live without a car. Public transport is practically nonexistent, and poor climate and bad roads rule out bikes or walking most of the time. This is all about bad land use planning in the US for the last half century.
The survey, IMHO, is BS. Who cares about a lousy one dollar increase for a gallon of gas? I wouldn't even slow down. When it costs two hundred bucks to fill up your SUV/fashion statement, you can expect to see changes. Personally, I'm driving my old v8 until a good PHEV comes along.
Posted by: George | Jun 26, 2007 1:08:57 PM
I do love this survey. It really shows just how much gasoline is like heroin. No other comparision does it justice: "gas is going up?" Oh, I'll just cut back on vacations, food, children's educations, etc. It'll be just like going on a diet!"
How the world must laugh at our V-8s.....and the Saudis and Iranians must laugh every time they send a check to their favorite Muslim charity....
Posted by: Dollared | Jun 26, 2007 2:39:00 PM
I question the accuracy of this entire survey. Remember when gas was hitting $2 a gallon and people were screaming bloody murder and there were constant news stories about "pain at the pump"? That was only a few years ago. Like, around the time of the last Presidential election. Now $2 a gallon seems like heaven. Folks seem to always say "if gas hits $X then I'll do Y" and when gas hits $X they don't do squat. They just recalibrate $X.
I knew a lot of people who cut back driving and discretionary spending after Hurricane Katrina when gas was the same price it is now... but within a few months were back to their old habits.
I think a lot of the individual changes are more viral. I got a bicycle a few years back when gas was going up, and a friend of mine went out and got one a few months later after he saw how much I enjoyed riding. However, there's only so much we can do as isolated individuals, and ultimately as a nation we need to have real city planning and fund good mass transit as well as raising MPG standards and supporting research into better technology.
Posted by: David Grenier | Jun 26, 2007 4:18:32 PM
Wherewe used to live a coworker of my sisters went from driving his car to taking the bus. His sick days exploded because of course poor people often had to work sick or not.
He went back to the car when hus daughter caught a drug resistant bug that required drugs not only spendy but damaging to kidneys and liver...
Now we have thetwit who trundled to europe and back with his wonderful bug....
And as my sister the nurse points out again andagain...howdo you think most vicyems of drug resistant bugs tend to get around before they find out they have it?
Mass transit will make way for public personal transit simply becuase no one will want to be crammed into a bus or rail car with 50 others.. when there is a 50 50 chance one of them has one or more drug resistant bugs.
Death? No think 1 month unpaid sickleave as you get potent drug combos pumped into you to kill it....and THEN comming back with everyone wondering..are they clean?
Posted by: wintermane | Jun 26, 2007 6:01:26 PM
If our society wanted to cut down on driving, most companies and our government(s) could, in many cases, have their employees telecommute. If only 20/25% of employees could do this, think of how much congestion, pollution, etc. could be eliminated. In addition, approximately 100 sq. feet of office space could be eliminated, and we all know how expensive that is.
My wife has been doing this for around six years. She is more efficient, is sick less, and we have saved a ton of money in automobile expenses, lunches, parking fees, and dress clothes.
Posted by: shigley | Jun 26, 2007 6:50:29 PM
However, in some cases, showing up is 90% of the job.
Posted by: gr | Jun 26, 2007 8:14:02 PM
I like the idea of personal pods, so why not make pods out of the cars we already have? A system where for trips between major cities individuals could park (and secure) their cars on a special train car (preferably more than one vehicle to a train car) that comes and goes as needed to be convenient (with a fast and efficient engine). Renting a car isn't necessary, and it reduces fuel usage especially during heavy travelled holidays in the summer, reduces flying, is potentially faster than driving and reduces wear on your vehicle. Drive to a station, hand the keys to a valet, ride in a train car (or maybe your vehicle), disembark and finish the drive to your destination (preferably in your hybrid). Just like freight. In Texas, I think it'd be great to do this between Dallas/Fort Worth, Houston, Austin and/or San Antonio, and maybe El Paso and the southern tip of the state. Or another large state, or through multiple states. The infrastructure pretty much exists already, maybe just design train cars to load and unload multiple cars, trucks, and SUVs very quickly and safely. Save on gas, retain independence. Though not good for work commutes, where I really like the idea of PRTs. I've looked a little into shipping cars via rail online, apparently it's very expensive and it's rare that the companies will do it, still I think it could be useful if there's a way to do it.
Posted by: Elliot | Jun 26, 2007 10:18:11 PM
wow, you know what's scary? people are willing to spend less money on FOOD just so that they can keep riding their own eff!ng cars. that's ridiculous.
Posted by: lensovet | Jun 27, 2007 12:40:44 AM
Wow, great stuff guys.
I with stan and the guy with the V8 waiting on a commerical PHEV. Though I applaud RL's false outrage and moral superiority. Why should the rich be the only ones allowed to be arrogant snobish etc. Let the greenie look down his nose at the GREATER polluter. Great comedy RL.
Posted by: Richard | Jun 27, 2007 4:50:18 AM
wintermane,
[in the voice of Yoda] one anecdote does not a statistical trend make...
I guess I should be deathly ill for all the buses & trains I have ridden on in the past few months? My children as well because I've taken them on some of those buses as well.
Let us see something here: Poor people go to work sick ...and drug resistant bugs...hmmm, those bugs don't gain a drug resistance unless you can afford the medication and then fail to utilize it properly. If they are too poor to take a day off from work, they probably won't spend two to four days worth of wages to see a doctor, get a Rx, and purchase the medicine. Additionally, those poorer people tend to work the jobs most people don't want to such as: Food Service, Janitorial jobs, menial labor, etc...I hope you don't go to any fast food places or restaraunts as they are packed with people and the poor people are the ones handling all your food. Oh no! Poor people also pick your crops unless you have a garden!
Posted by: Patrick | Jun 27, 2007 9:40:20 AM
Well good for you we didnt live in a city with clean busses and had alot more sick poor people on em. We live in a much nicer area now and im not even sure if they have busses here.. I think they only jave vans.
Like it or not MASS transit does have a connotation in many places of festering pox boxes. You always wonder what they heck the guy with the weird lesions has as he coughs that horrid gurgle.
As for food... thats what washing and cooking deal with.. my best friends as a young kid were illegal immigrabts and what they told me... eeeeeeeeeeeeeeeeeeew!!!!!!! Things are supposedly better these days... but not much.
Posted by: wintermane | Jun 27, 2007 12:38:51 PM
Re: "It's a sad state of affairs when a majority of people say they would cut back on food to accommodate their driving."
Peter (and other city dwellers)- Believe it or not, there are quite a few of us that live where there is NO public transportation available. As the cost of fuel raises, we have no alternative but to cut back on discretionary spending.
Posted by: Bob | Jun 27, 2007 11:16:13 PM
Nick,
A modern mass transit system as opposed to the 1870's era antiques, takes you from Point A to Point B where you really want to go. It does NOT make you go to A', near where you start, to B', near where you want to go. Leaving you to get from A to A' and B' to B.
Decentralized private autos when under non human control, fully using the roadway and not constantly effecting waves of compression and extension as human traffic does,(stop-and go) is coming. The individual auto is close to having the necessary components and are all falling in place.
Drive by wire, steer by wire, brake by wire, GPS, intelligent cruise control, to maintain spacing, wireless comm, for communications, et cetera, are some of the components.
Within a decade or two, you'll be able to drive to work and the the modern mass transit vehicle will drop you off at the entrance, rather than some distant parking facility.
It will return home, itself, retracing it route in reverse, for use by other family members eliminating parking problems and the need for multiple vehicles, perhaps recharging itself, or earning money on V-to-G. At the appropriate time, the vehicle will return to pick you up, or when summoned, and return you home or wherever you wish to go on some other engagement.
Similar but better than having a Limousine and Chauffeur, as that is what modern mass transit will REALLY (and SHOULD BE) be like.
No more A to A', B' to B considerations.
George,
I lived in Manhattan for almost half a year one period, commuting by plane shuttle from DC, and inside the City, used the Subway as opposed to the taxi, or auto.
I worked in DC and lived in the Suburbs, so took "mass transit" or private auto to work, and then used the Metro subway to various business in the DC metro area.
I even worked in NYC on another occasion for 4 months and commuted, BY ELEVATOR, from the hotel halfway up one Twin Tower to the mezzanine and to the 97th floor of the other Twin Tower. That "commute" took almost 25 minutes by the way! I observed that I needed at least six rides (often more) to "commute". Local elevator to express; to local; to local; to multiple slide ways, to local; to express; to local; to express; to local.
Those are exceptions. The government is concentrated in the federal enclave and the expenditure for the Metro was/is gargantuan and undoable elsewhere without unlimited federal funding. Business in Manhattan that I did, was concentrated in Manhattan.
Those were very special cases.
The more common situation would have required private/rental autos.
Posted by: Stan Peterson | Jun 28, 2007 10:59:22 AM
This is not surprsing since Mass transit as presently constituted a leftover of 1870's technologies, is not suited to the Amercan city as built over the last hundred years.Not true! American cities were quite suited to Mass transit until after WWII, when GM finished buying and closing down city trolley systems.
Great American Streetcar Scandal
Posted by: DS | Jul 3, 2007 12:12:11 PM
