Higher Gas Prices Push Consumer Optimism Lower in May
ALEXANDRIA, Va. — Consumer optimism is taking a dip as fuel prices inch up, according to NACS, the Association for Convenience & Fuel Retailing.
In the latest NACS Consumer Fuels Survey, nearly nine in 10 consumers said gas prices affect their feelings about the economy. The findings come on the heels of rising gas prices, which have increased roughly 50 cents per gallon since February.
In addition, 10 percent of consumers said they will drive less over the next 30 days, a time when driving traditionally increases with the unofficial start of the summer driving season.
On average, consumers said they would reduce how much they drive if gas prices rise another $1.02, to $3.61 per gallon. The $1.02 gap between current prices and the price at which consumers would change their behavior is the lowest recorded this year, according to NACS.
As prices at the pump tick up, consumers are taking notice. In the survey, seven in 10 consumers said gas prices today are higher than they were 30 days ago, which is nearly double the proportion that said so last month (38 percent). Similarly, about 72 percent of consumers expect gas prices to continue to rise over the next 30 days, a significant change compared to April (49 percent).
Nationwide, economic optimism fell from 52 percent to 48 percent. Gas prices had an even bigger impact on optimism in western states such as California, where gas prices are averaging up to $1 per gallon more than the national average.
Optimism in the West fell from 58 percent to 47 percent over the past month and trailed national optimism for the first time since August. Consumers in the West also do not expect the situation to get better soon: nearly four in five (79 percent) expect gas prices to increase this month.
According to NACS, the best indicator of consumer optimism is miles per dollar, which measures consumers' self-reported fuel efficiency and gas prices. Miles per dollar fell 10 percent to 8.83, the lowest level so far in 2015. Miles per dollar has tracked consumer optimism for six of the past seven months.
"While optimism over the economy declined, it is still significantly higher than this time last year when it was only 41 percent. And because the spring switchover to summer-blend fuel is nearly complete, many analysts suggest that prices will soon moderate," noted Jeff Lenard, NACS' vice president of strategic industry initiatives. "Fuels retailers are certainly optimistic: 86 percent of our members say they are optimistic about their business in the second quarter."
Alexandria-based NACS, which represents the convenience store industry, conducts the monthly consumer sentiment survey to gauge how gas prices affect broader economic trends. The latest survey was conducted by Penn, Schoen and Berland Associates LLC among 1,105 gas consumers May 5-7.