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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.

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!

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!

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.

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.

>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.

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.

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.

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...

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.

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.

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.

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.

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.

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.

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.

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.

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....

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.

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?

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.

However, in some cases, showing up is 90% of the job.

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.

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.

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.

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