“For the past seven months, consumer sentiment has risen or fallen along with gas prices,” says NACS Vice President of Government Relations.
The news is decidedly mixed as it relates to consumer confidence about the economy. On one hand, U.S. gas consumers headed into July more optimistic than they have been all year. However, given that consumer sentiment closely tracks gas prices, this optimism may be short-lived as oil prices spiked to 16-month highs and gas prices have followed suit over the past two weeks.
The third quarter began with consumer optimism regarding the economy at the highest level recorded this year — 48% of consumers expressed optimism while only 52% expressed pessimism, according the latest monthly NACS Consumer Fuels Survey. The national consumer survey was fielded July 12-14, when national gas prices averaged under $3.50 per gallon, based on reported weekly gas prices from the Oil Price Information Service (OPIS).
A huge percentage of consumers (86%) surveyed said that gas prices impacted their feelings about the economy in July.
“Gas prices play a big role in defining consumer sentiment and that continued in July,” said NACS Vice President of Government Relations John Eichberger. “For the past seven months, consumer sentiment has risen or fallen along with gas prices, and consumers were clearly in a good mood as July began. However, the steep increase over the past few weeks is a strong indicator that we could see a spike in pessimism in August and it is something that we will closely monitor in our next survey.”
While consumers expressed more optimism in July, nearly two thirds of consumers (64%) surveyed also said that they expected gas prices to climb over the coming 30 days.
In light of the recent price increase, it’s logical to wonder at what point gas would get so expensive that consumers would try to reduce the amount they drive. On average, consumers said that price is $4.11 a gallon, which is coincidentally the record average national gas price reached in July 2008.
Gas prices would have to reach nearly $5.00 per gallon before consumers say that they would seek out an alternative to driving or drive drastically less. The mean price cited by consumers was $4.93 per gallon.
“While the second half of the year began with much promise, retailers in all channels may be in for a bumpy ride over the coming weeks. This may be particularly acute for fuels retailers who squeeze margins to fight for customer traffic when gas prices rise.”
Every month, the National Association of Convenience Stores (NACS) conducts a nationwide survey in partnership with Penn, Schoen and Berland Associates LLC to measure consumer perceptions about gas prices and how they relate to broader economic conditions. For the July survey, 1,266 gas consumers were surveyed from July 12-14, 2013. The margin of error for the entire sample is +/- 2.75 at the 95% confidence interval and higher for subgroups. Some percentages may add to more or less than 100% due to rounding. The OPIS weekly national average price for gas was $3.479 on June 8. Summary results from this and previous surveys can be found at www.nacsonline.com/gasprices.